Merchant Refused Refund After UPI Payment? What to Do
Merchant refusing a refund for a UPI payment? Know when you are owed one, how to dispute it in your UPI app, the consumer law route and a complaint to copy.
In this article
"I paid ₹6,500 by UPI for a jacket, returned it within the return window, and the store now says no refund, only a credit note." If a merchant refuses a refund you are owed, first put the demand in writing to the merchant's grievance officer, then raise a dispute in your UPI app, and take it to the National Consumer Helpline (1915) if neither works. UPI itself cannot pull money back without the merchant, but consumer law can make the merchant pay.
This guide explains when you are entitled to a refund, the order to escalate in, the timelines that apply as of October 2026, and a complaint you can copy. If the merchant has already said the refund was sent and it has not arrived, our guide on UPI refund not received is the better starting point.
Why it happens
A successful UPI payment is a push payment: you authorised it with your PIN, and the money is in the merchant's account. Unlike a failed transaction, there is no automatic reversal. Merchants refuse refunds for a few reasons, some fair and some not:
| Merchant's reason | Is it valid? | What you can do |
|---|---|---|
| "No refunds, store credit only" printed on the bill | Valid only if disclosed before purchase and the goods are not defective or misdescribed | If the product was faulty or not as described, demand a refund regardless |
| Return window has passed | Usually valid for change-of-mind returns | Check the exact policy date; defects may still be covered by warranty |
| "We never received the payment" | Needs checking | Share the 12-digit UPI reference; ask them to check with their bank |
| Item was not delivered or service not provided | Not valid; you paid for nothing | Merchant must refund; raise a UPI dispute too |
| Order cancelled by the merchant | Not valid | Merchant must refund |
| "Refund will take 30 to 60 days" | Depends on stated policy | Hold them to the policy; e-commerce complaints must be resolved within a month |
Under the Consumer Protection Act, 2019, refusing a refund for defective goods, deficient service, or goods not delivered can be an unfair trade practice. The Consumer Protection (E-Commerce) Rules, 2020, also require online sellers to display their return and refund policy and to have a grievance officer.
Step-by-step: what to do
Day 1: build your case
- Collect evidence. The UPI reference number (UTR/RRN), date, amount, merchant name and UPI ID, the bill or order ID, the refund or return policy as shown at the time of purchase, and photos of any defect or the return receipt.
- Ask for the refusal in writing. A message or email saying why they will not refund is useful later. Stay polite and factual.
- Write to the merchant's grievance officer. Online sellers must name one on their website or app. For a local shop, write to the owner or head office.
Week 1 to 4: use the payment and consumer routes
- Raise a dispute in your UPI app. Open the transaction, choose help, and pick the reason closest to "goods or services not received" or "merchant not refunding". The app passes it through its partner bank and your bank to the merchant's bank. This works best for non-delivery or merchant-cancelled orders; it is weaker for change-of-mind returns.
- Follow up with your bank if the app's complaint stalls. Your bank is responsible for taking your UPI dispute forward. Ask for the complaint number.
- Call the National Consumer Helpline on 1915, or use its app or website. NCH tries to settle the complaint with the company, and many large merchants respond to it.
After a month: formal escalation
- Escalate to NPCI if your bank or app has not handled the dispute properly, using "UPI Help" in the app or the dispute redressal option at npci.org.in.
- Go to the RBI Ombudsman at cms.rbi.org.in if the bank rejects or ignores your UPI dispute for 30 days. Note that the Ombudsman acts against the bank's handling, not the merchant. See bank not resolving your complaint.
- File a consumer complaint on the e-Jagriti portal before the district consumer commission, which hears claims up to ₹50 lakh. You can file without a lawyer. Generally you must file within two years of the cause.
If the merchant turns out to be fake or has vanished, treat it as fraud: report to 1930 or cybercrime.gov.in at once.
Timelines at a glance
| Step | Timeline as of October 2026 |
|---|---|
| E-commerce grievance officer | Acknowledge in 48 hours; resolve within one month |
| UPI app and bank complaint | Bank should resolve within 30 days before Ombudsman route opens |
| RBI Ombudsman | File within 90 days of the bank's reply or response deadline |
| National Consumer Helpline | Usually a few weeks of mediation; no fixed legal deadline |
| Consumer commission | File within two years of the cause of action |
Real-life example
Arjun paid ₹6,500 by UPI to an online store for a jacket on 2 September. It arrived with a torn seam. He requested a return on 4 September, within the store's 7-day window, and the courier collected it on 6 September. On 15 September the store offered only a credit note.
- 16 September: he emailed the grievance officer with photos, the UPI reference and the return receipt. It was acknowledged on 17 September, within the 48-hour limit.
- 16 September: he also raised a dispute in his UPI app for "merchant not refunding".
- 10 October: no resolution, so he lodged a complaint with NCH on 1915.
- 18 October: the store refunded ₹6,500 to his bank account.
Had the store not responded, his next step would be a complaint on e-Jagriti. For ₹6,500 the fee is nil or minimal, and he could also claim for the inconvenience. Had he paid with a credit card through UPI or directly, he could also have used the card dispute route; see credit card chargeback vs refund.
Sample complaint to the merchant
Subject: Refund request for order [ID], UPI Ref [number]
Dear Grievance Officer,
On [date] I paid Rs [amount] by UPI (Ref [number]) for [item/service]. [The item was defective / not delivered / the order was cancelled by you.] I [returned it on date / never received it]. Your refund policy at the time of purchase allowed [describe].
Under the Consumer Protection Act, 2019 and the Consumer Protection (E-Commerce) Rules, 2020, I request a full refund of Rs [amount] to my original payment method within 7 days. If not resolved, I will take this to the National Consumer Helpline and the consumer commission.
Name, phone, order ID. Evidence attached.
What not to do
- Do not accept a credit note for a defective or undelivered item unless you are happy with it; it may close your claim.
- Do not take any refund "help" from callers asking for your UPI PIN, OTP or a screen-sharing app. Receiving a refund never needs a PIN.
- Do not post personal details like your phone number or order ID in public complaints on social media.
- Do not raise the same complaint in five places on day one. Go in order and keep reference numbers.
- Do not miss deadlines: 90 days for the Ombudsman after the bank's reply, two years for the consumer commission.
Key takeaways
- A successful UPI payment cannot be reversed without the merchant; the main levers are the grievance officer, NCH and the consumer commission.
- The RBI ₹100 a day compensation applies only to failed transactions, not merchant refunds.
- Online sellers must acknowledge complaints within 48 hours and resolve them within one month.
- Raise a UPI app dispute for non-delivery or merchant cancellation; escalate to your bank, NPCI and the RBI Ombudsman if the bank mishandles it.
- Keep the UPI reference number, the bill and the policy as shown at purchase; they decide most cases.
Frequently asked questions
Can I get a UPI payment back if the merchant refuses a refund?
UPI payments are not reversible on request like some card payments. You can raise a dispute in your UPI app for goods or services not provided, but the strongest routes are the merchant's grievance officer and consumer law through the National Consumer Helpline or a consumer commission.
Does the ₹100 per day RBI compensation apply to merchant refunds?
No. That rule covers failed transactions, where your account was debited but the payment did not go through. A refund the merchant owes for a cancelled order, return or non-delivery is governed by the merchant's terms and consumer protection law.
How long does an e-commerce site have to resolve my refund complaint?
Under the Consumer Protection (E-Commerce) Rules, 2020, an online seller's grievance officer must acknowledge a complaint within 48 hours and resolve it within one month of receiving it.
Where can I complain if a shop or website will not refund me?
Call the National Consumer Helpline on 1915 or use its app or website for mediation. If that fails, file a case on the e-Jagriti portal before the district consumer commission, which handles claims up to ₹50 lakh.
Can the RBI Ombudsman make a merchant refund me?
No. The RBI Ombudsman handles complaints against banks and payment providers, not merchants. It can help if your bank or UPI app mishandled your dispute, for example by ignoring it or not passing it to the merchant's bank.
This article is for general education and is not personalised financial, tax or legal advice. Rates and rules are as of 22 Oct 2026; confirm current terms with your lender, AMC or a qualified adviser.
