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Payment companies suffer frequent UPI system outages

In the last few weeks, payment companies have suffered frequent “downtimes” or “outages” on the Unified Payments Interface (UPI) platform leading to many unprocessed customer and merchant transactions, four payments industry executives, who operate UPI-based apps and platforms, told MediaNama.

While the adoption of UPI has grown significantly since April, there has been a corresponding rise in transaction failures on account of the high volumes of transactions flowing through the banking system. UPI, which is operated by the National Payments Corporation of India (NPCI), is the fastest growing retail payments platform in the country. In November this year, the platform clocked over 220 crore transactions worth ₹3.9 lakh crore in November this year, up by 90% from March. Between April and November this year, over ₹23 lakh crore worth of transactions flowed through the UPI system, according to NPCI data.

Several frequent outages

A senior payments executive told MediaNama that the current UPI system is “completely broken and it is not just outages that are the problem but there is no transparency on what is happening.” Since then implementation of UPI was left to the banks, with a zero merchant-discount-rate most of the banks are not upgrading their system while transactions keep scaling, this person said on the condition of anonymity.

“There is no economic model in UPI payments, banks are not investing and some of them have said they are not interested in even maintaining the required infrastructure. So the whole UPI system was set up in haste and was scaled in haste, that people are now losing confidence. People now are saying it’s better to use a wallet because there are no multiple parties in the chain, compared to 4 parties in the UPI system,” the payments executive quoted above said.

A second payments executives said that the number of issues on the system have been rising for some time, but the frequency of outages have increased significantly in the last few weeks. “It is not a network issue, because that can be easily resolved by the customer re-initiating the transaction. It certainly seems like a capacity issue with the banks, perhaps they are short-staffed or the quantum of transactions is too high to handle and therefore is a memory problem at the server level,” this person said on the condition of anonymity.

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A standard UPI transaction, whether through a QR-code scan or UPI ID,  begins with a debit from the remmiter’s account, which is then passed to the NPCI’s UPI Switch, and then the funds are credited to the beneficiaries’ bank account, within a matter of seconds.

A third payments executive said that for many customers the failure is happening at the debit level itself and if the transaction fails after multiple attempts, it means that the downtime is lasting for a long time. “We are practically seeing one issue or the other every day, and it is affecting all banks whether they are the remmitter or beneficiary. Some of the smaller private and public banks are not focusing on UPI since there is no money to be made, and its just a load on their infrastructure,” this person said on the condition of anonymity.

However, Ashneer Grover, chief executive officer and co-founder, BharatPe says that there wasn’t a disproportionate outage on UPI, otherwise the overall UPI transactions would have been lower in November compared to the previous months. “Some banks may have capacity issues, so this is an indication that they need to increase their server space to accommodate and handle these UPI volumes,” he said.

Three of the executives quoted above said that the issues they faced was due to issues with their anchor banks, including ICICI Bank, Axis Bank, Kotak Mahindra Bank, State Bank of India and among others. We have reached out to the NPCI, State Bank of India, Axis Bank and ICICI Bank for comments. We will update this article with their responses, once received.

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“While UPI volumes continue to grow, we have taken several measures to reduce technical declines including a switch level upgrade and higher concurrency. Due to these measures, our TD rate in November is below 0.4%,” Deepak Sharma, President and Chief Digital Office, Kotak Mahindra Bank said in an emailed response.

Rising technical failures on UPI

The NPCI publishes bank performance data on the UPI network every month, which provides data on the total volume of UPI transactions a bank processes, either as a remmitter or beneficiary, the quantum of transactions that failed due to business declines (insufficient funds) and the quantum of transactions that failed due to technical declines (unavailability of systems and network issues at banks or the NPCI). Since August, the technical decline rate for some public sector banks and private banks have been rising. Nine of the top ten banks, in terms of technical declines on the remitter side in October, were public sector banks.

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We have reached out to Punjab National Bank (Andhra Bank and Corporation Bank), Union Bank of India (United Bank of India), Canara Bank, Bank of Baroda (Dena Bank) and Indian Bank for comments. We will update this article with their responses, once received.

A Bank of India official said that the bank is working on optimising its payments architecture and it has added new application servers to increase success rate. “We are in process of installing high-end M8 servers [Oracle] and making it more robust for high volume UPI transactions,” the official said in an emailed response.


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**Update (December 3, 2020 10:26 am): Updated with tweet from Bipin Preet Singh, chief executive officer, MobiKwik.

**Update (December 2, 2020 8:53 pm): Updated with statement from Bank of India official. Originally published on December 2, 2020 at 7:41 pm

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Reports on banking, payments, fintech and crypto-curencies. Additional reporting on media regulations, data protection and other areas.

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