🏛 Regulatory Framework

These guidelines are issued in accordance with operational standards prescribed by the National Payments Corporation of India and regulatory oversight of the Reserve Bank of India.

UPI Payout is a regulated commercial disbursement facility.

⚠️ It is NOT a personal money transfer system.

Any misuse is treated as a regulatory violation and may be reported to sponsor banking partners.

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🎯 Purpose of These Guidelines

These directions formally define how merchants must operate UPI Payout services.

By enabling payouts, you expressly agree to comply with all requirements stated herein, including future amendments.

UPI Payout may only be used for legitimate business payments such as:

✔ Customer refunds

✔ Vendor settlements

✔ Customer settlements

✔ Payroll & incentives

✔ Structured reward programs

Anything outside these categories is classified as non-compliant financial activity.

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Core Operating Principle

Every payout must satisfy:

✅ Legitimate business purpose

✅ Verified beneficiary

✅ Declared transaction category

✅ Internal ledger traceability

Golden rule:

❗

If a payout cannot be explained in one valid business sentence, do not initiate it.

Merchants remain fully accountable for every payout executed using their credentials.

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✅ Permitted Use of UPI Payout

Merchants may initiate payouts only for the following approved categories:

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🔁 Customer Refunds

Refunds against cancelled orders, failed services, or partial reversals.

Requirements:

✔ Reference original transaction

✔ Refund ≤ original amount

✔ Same customer beneficiary

✔ Refund window compliance

Synthetic or mismatched refunds are treated as misuse.

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🤝 Vendor / Partner Settlements

Payments to onboarded vendors, contractors, service providers, or franchise partners.

✔ Documented business relationship required

✔ Beneficiary must be pre-registered

✔ Contractual justification mandatory

Ad-hoc vendor payouts are prohibited.

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🏪 Customers Settlement

Marketplace or platform settlements linked to:

✔ Customer collections through regulated PA-PG channels by Merchant

Every settlement must map directly to recorded revenue.

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👨‍💼 Employee / Agent Payments

Salary components, incentives, or reimbursements to registered staff.

✔ Employee/agent must exist in HR records

✔ Payroll or incentive documentation required

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🎁 Cashback / Reward Programs

Allowed only when:

✔ Publicly documented

✔ Deterministically calculated

✔ Non-discretionary

Manual or random reward payouts are not permitted.

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⚠️ Conditionally Allowed (Prior Approval Required)

The following require explicit written approval and enhanced monitoring:

🟡 Insurance claim payouts

🟡 Subsidy / benefit disbursements

🟡 Event-based mass payments

Wallet withdrawals are permitted only if:

✔ Funds already belong to the user

✔ Full KYC completed

Any unapproved flow may result in service suspension.

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❌ Strictly Prohibited Activities

Any violation may result in immediate suspension or termination.

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🚫 Personal transfers (founders, friends, family)

🚫 Merchant QR usage (Paytm Merchant, PhonePe Merchant, BharatPe Merchant, or any P2M merchant QR)

🚫 Circular fund movement (merchant → user → merchant loops)

🚫 Cash substitution (UPI payout → physical cash)

🚫 Lending / salary advances / BNPL

🚫 Loan repayment routing

🚫 Gambling / betting / gaming redistribution

🚫 Cryptocurrency funding

🚫 Anonymous bulk payouts

🚫 Wallet loading / stored value creation

These activities are treated as high-risk financial misuse.

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🚨 Behavioral Monitoring & Risk Surveillance

All payout activity is continuously monitored for:

🔍 Rapid repeat payouts

🔍 Micro-structuring below thresholds

🔍 Late-night payout bursts

🔍 Same IP/device across beneficiaries

🔍 Bounce-back fund flows

🔍 Dormant account activation

Such behavior may trigger:

⚠ Transaction blocks | ⚠ Manual compliance review | ⚠ Service disablement | ⚠ Account Disabled

Risk scoring is automated and irreversible once thresholds are breached.

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🏷 Purpose Code Requirement

Every payout must carry a meaningful purpose:

✅ ORDER_REFUND

✅ VENDOR_SETTLEMENT

✅ EMPLOYEE_SALARY

✅ CUSTOMER_SETTLEMENT

❌ TRANSFER || ❌ PAYMENT || ❌ GENERAL

Generic purpose codes weaken regulatory defensibility and are not accepted.

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👤 Beneficiary Responsibility

Merchants must ensure:

✔ Beneficiaries are pre-registered

✔ Details are accurate

✔ Payments go to intended recipients

Merchants bear full liability for payouts sent to incorrect or unauthorized beneficiaries.

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🔐 Technical & Operational Expectations

Merchants must maintain:

🛡 Secure API usage

🛡 Internal transaction references

🛡 Beneficiary records

🛡 Refund mapping

🛡 Velocity controls

🛡 Accurate ledger reconciliation

Failure may result in restricted access or permanent deactivation.

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📋 Audit, Investigation & Information Requests

Merchants may be required to provide:

📄 Transaction records

📄 Beneficiary master data

📄 Refund proofs

📄 Business agreements

📄 Customer complaint logs

Merchants must cooperate fully during compliance investigations.

Non-cooperation constitutes breach of agreement.

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⚖ Enforcement Actions

Non-compliance may result in:

⛔ Transaction blocking

⛔ Temporary account suspension

⛔ Permanent payout termination

⛔ Sponsor bank reporting

⛔ Recovery of disputed funds

⛔ Merchant agreement termination

All enforcement actions are final.

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🧾 Financial Recovery & Indemnity

Merchants agree that:

✔ Any disputed or fraudulent payouts may be recovered from balances

✔ The platform may debit merchant wallets or settlements to offset losses

✔ Merchants indemnify AeronPay against regulatory penalties arising from misuse

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🗃 Data Retention & Recordkeeping

Merchants must retain payout records for minimum 7 years, including:

📁 Transaction logs

📁 Beneficiary details

📁 Business proofs

Failure to maintain records may result in suspension.

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✍ Merchant Declaration

By using UPI Payout, merchants confirm:

✔ All payouts are genuine business transactions

✔ No personal or Restricted Category activity

✔ All beneficiaries are verified

✔ Proper records are maintained

Violations may lead to immediate service termination.

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🏁 Closing Statement

UPI Payout is regulated business infrastructure — not unrestricted money movement.

Merchants are expected to operate with:

🧭 Transparency

🧭 Discipline

🧭 Regulatory responsibility

Compliance is not optional.

It is a condition of participation.

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📅 Version Released

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Regards, Department of Risk & Compliance (AeronPay)