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UPI failure rate improves in February, PhonePe retains leadership position

The failure rate or technical decline (TD) rate on the Unified Payments Interface (UPI) has improved to 1.43 % in February 2021 compared to a historical high of 3.4% in December last year, according to data from the National Payments Corporation of India (NPCI).

As transactions on the UPI platform increased, in the wake of the pandemic, the underlying payments and banking infrastructure was over-burdened. This lead to a rise in the failure rate on UPI over the course of 2020. In November 2020, MediaNama reported that payment companies were facing frequent glitches and outages with regards to the UPI platform due to high volumes and weak banking infrastructure. In anticipation 0f higher transaction volumes, fr0m January onward the NPCI began upgrading its platforms in order to improve its IT systems and underlying infrastructure. Banks, on their part, have been freeing up or acquiring more server capacity to accommodate the growth in UPI transactions within their networks.

In February this year, UPI processed nearly 2.3 billion transactions worth over Rs 4.25 lakh crore, up by 73% in volume terms and 91% in value terms from the same month last year. At a transaction decline rate of 1.43%, around 32.9 million UPI transactions were not processed due to technical reasons last month, according to MediaNama’s calculations.

Banks with lowest failure rate

  • Paytm Payments Bank: 0.11%
  • Yes Bank: 0.21%
  • HDFC Bank: 0.31%
  • Bank of Baroda: 0.39%
  • IDBI Bank: 0.42%

Banks with highest failure rate

  • Andhra Bank: 15%
  • Indian Bank: 10.28%
  • Allahabad Bank: 6.83%
  • Union Bank of India: 4.2%
  • Bandhan Bank: 3.58%

PhonePe remains dominant, WhatsApp Pay languishes

In February 2021, PhonePe processed over 975 million transactions worth over Rs 1.89 lakh crore. The company has been a dominant player in the UPI space for several years, and in the last few months it has beaten Google Pay consistently month after month. PhonePe had a market share of 44% in UPI during February, compared to Google Pay’s 40% market share.  In February, Paytm had a market share of 8.9%, followed by BHIM UPI at 1.5%, CRED at 0.98% and Amazon Pay at 0.89%.

WhatsApp Pay, on the other hand, saw its overall UPI performance decline marginally in February. It processed 55 million transactions worth Rs 32.41 crore in February, compared to 56 million transactions worth Rs 36.44 crore in January.   WhatsApp Pay’s UPI service, which got the regulator and NPCI’s nod last year to launch in a graded manner, has been growing over the last few months.

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Yet, despite the messaging platforms’ ubiquitous presence among Indian consumers, it does not command a market-share like its global tech counterparts who are invested in the space. In February, WhatsApp Pay’s market-share stood at a negligible 0.0075%.

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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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