I am in Thailand. Fraud is a much smaller issue because it’s a push-based system. You cannot withdrawal from someone else’s account just by knowing the number, unlike with credit cards.
How does that work?
However after the fact there's less options, I've never gone through
The returns/refunds can be handled offline by a mutually agreed facilitator that does not have a monopoly on the payment system. You can also have a legal mandate that all internet purchase, for example, should employ such a service, that charges a market fee and is then liable for making fair decisions.
The case where you have a dispute with the merchant (i.e transaction is authorised but problem is 1 layer up - you feel that reality doesn't match up with the payment record!) is different. You paid as intended but the thing you wanted didn't happen. Right now things are bundled together.
Sometimes this is handled by marketplace (think amazon, vs paypal/ebay and their different balances of favouring merchant vs consumer) but overall (e.g. consider shopify who are basically uncontactable in case of merchant disputes) I don't think the whole payments system makes this very clear. In practice it is sort of a shifting balance between various parties.
There are actually big questions of who eats risk between consumer, platform, merchant and various payment processors for a given transaction and things are a bit obscured. In practice all the parties EXCEPT the consumer know what is really going on.
It could be made much more clear who has the responsibility for resolving merchant disputes and their records could be made public, and this could be a more explicit point of difference in payment / marketplace offerings.
I think lots of people would make different decisions about where and how they bought things if they could see statistics about how disputes are handled.
I am not arguing for any specific method of solving disputes or more government intervention in general, I just think that if things were more transparent (mandatory reporting) fewer people would feel ripped off, people could make more informed decisions, and marketplaces / processors who are adept at resolving disputes would be rewarded as they deserve. Basically, the market would work better.
Consumer protection deals with chargebacks after the payment was made and the products/services are not delivered to required standards. This gives enormous power to credit card companies against merchants and enables obscene rent extraction against consumers who don't require it, yet still pay 2-4% more on everything they buy, even with other payment methods.
What happens if a fraudulent charge happens?
Like you hand cash to someone. The transaction is done at the moment money changes hand. You don't get to call someone to snatch the money back to you against the payee's will.
For online purchase, for example, buyer pays the marketplace (e.g. taobao.com) to temporarily hold the money -> seller ships the goods -> buyer confirms goods are received -> marketplace pays seller. If there is a question, you take it to the marketplace to sort things out according to marketplace & seller policy. Either way, the payment provider doesn't concern itself with any of this - it only routes money according to payer's request.
What a lot of folks do is they pay for most purchases with UPI but try and ensure there is some kind of "undo" button somewhere for large purchases. If I am making a purchase on a shady website, or making a large purchase, I will pay using CC so that I can chargeback and the CC company will deal with it. However, even if I am buying a laptop or whatever on Amazon, I know that amazon will deal with returns and stuff properly, so I would just UPI it. There is also the matter of credit card offers and points and what not. If there is a good discount then CC is used.