NPCI Prohibits Nicknames in UPI to Ensure Error-Free Transactions
In a pivotal step aimed at bolstering user safety and transparency in digital transactions, the National Payments Corporation of India (NPCI) has mandated that all Unified Payments Interface (UPI) applications display only the official name of the recipient as recorded in the Core Banking System (CBS). This directive, outlined in a circular dated April 24, 2025, requires UPI apps to show the bank-registered name during peer-to-peer (P2P) and peer-to-merchant (P2PM) transactions. The new rules must be fully implemented by June 30, 2025, or face compliance actions.
New Guidelines for UPI Transactions
The NPCI’s recent guidelines are designed to enhance the security of digital transactions by ensuring that users can easily verify the identity of the recipient. Under the new rules, only the “ultimate beneficiary name,” which refers to the individual or entity receiving funds, will be displayed on transaction confirmation screens and in transaction histories. This change aims to eliminate the potential for fraud that arises from misleading display names, which can often lead to misdirected payments. The NPCI emphasized that names will now be sourced directly from the Validate Address API, which retrieves official bank names, thereby increasing the reliability of the displayed information.
The directive specifically prohibits the use of names derived from QR codes, contact lists, or user-defined labels. This move is expected to close existing loopholes that have allowed fraudsters to exploit the system by impersonating trusted brands or individuals. The NPCI has instructed UPI applications to disable any features that allow users to edit or customize beneficiary names, thereby standardizing the display of recipient information.
Impact on Small Merchants
The new regulations will particularly affect small merchants who often rely on UPI for transactions. Many of these merchants, such as kirana store owners and street vendors, currently use QR codes that may display non-official names. Once the new rules are enforced, customers will only see the CBS-registered name of the merchant, rather than any brand name or custom label they may have previously used. This change is expected to enhance clarity for users and reduce the likelihood of errors during transactions.
Experts believe that this shift will significantly improve trust within the payment ecosystem. By ensuring that users see only verified names, the NPCI aims to create a more secure environment for digital transactions. The CFO of NTT DATA Payment Services India, Rahul Jain, noted that this step could drastically reduce accidental transfers and fraudulent activities, adding a crucial layer of authentication to the payment process.
Addressing Concerns Over Fraud
The NPCI’s directive comes in response to rising concerns about UPI-based fraud, which has been exacerbated by misleading display names that do not match official banking records. The organization aims to mitigate these risks by standardizing the way beneficiary names are displayed across all UPI applications. This initiative is expected to enhance user confidence when authorizing transactions, as it reduces the anonymity that can lead to fraudulent activities.
Legal experts, such as Mukesh Chand from Economic Laws Practice, have expressed support for the changes, stating that they will help users feel more secure in their transactions. The move is seen as a proactive measure to combat the increasing prevalence of digital fraud, which has become a significant issue in the rapidly evolving landscape of online payments.
Looking Ahead
While some users may face challenges during the transition to the new system, experts believe that the long-term benefits will outweigh any initial inconveniences. The NPCI’s commitment to improving the safety and transparency of UPI transactions is a significant step forward in protecting consumers and fostering trust in digital payment systems. By standardizing the display of beneficiary names, the NPCI is not only enhancing security but also paving the way for a more reliable and user-friendly payment ecosystem.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
