In a bid to curb the artificial inflation of transactions on the Unified Payments Interface (UPI) ecosystem, the National Payments Corporation of India (NPCI) has decided to block transactions, where the payer and the payee account are both the same, the Economic Times reports. The NPCI, issuing the order through a circular said that all such transactions will be blocked from August 1, the report added. ET has seen a copy of the circular.

“While analysing the transaction patterns we have observed instances wherein both credit and debit accounts are same…customers are sending money from their account to the same account…these transactions do not serve any use case and also add unnecessary load on the system,” read the circular according to ET.

The NPCI explained that these transactions happen primarily in three ways-

  1.  Transactions done between the same UPI accounts,
  2.  Transactions done from one UPI ID to an account number, but the underlying bank account remains the same and
  3.  Transactions done by sending money to another UPI ID but connected to the same bank account.

Some bankers explained that customers have an incentive to indulge in such transactions given the various incentives including, cashbacks offered by the non-banking UPI players for making transactions through their services.

NPCI said that all such transactions will be blocked in the UPI central system and has also asked payment service providers and banks to block such transactions at their end. According to industry players, the move could bring down the growth of the number of transactions happening on UPI. However, the NPCI, by blocking such transactions hopes to not just reduce the load on their systems but also bring out the genuine number of transactions that take place in the UPI ecosystem.

According to an executive of a payment company, failure rates on UPI tend to be high also because of low-value, repeated transactions on the platform. Such fake transactions could be substantially reduced after NPCI’s circular, the ET report said quoting the executive.

This news comes days after the NCPI released a circular announcing that all Aadhaar-based payments through UPI and Immediate Payment System (IMPS) channels will be discontinued from August 31st, 2018. Further, there have also been reports in the media that the regulator is all set to launch UPI 2.0 with a host of features and upgrades.