Rising UPI outages highlight gaps in India’s digital payment infrastructure

Unified Payments Interface (UPI), India’s most popular digital payment method, processes around 7000 transactions per second and over four lakh per minute. Any disruption, even for a short time, affects millions. On April 12, UPI faced its second major outage in 18 days, following a 30-minute disruption on March 26, alongside two smaller glitches likely caused by year-end banking pressure. 

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With around 40 crore unique users and 83% of all digital transactions happening through UPI, these disruptions are alarming. Approximately 65% of UPI transactions are merchant-based, meaning even a 10-minute outage could stall 24 lakh transactions. Experts noted that a large segment of the population no longer carries cash, making UPI failures commercially crippling. 

Outages are often caused by overburdened banking systems or technical issues at NPCI, which operates UPI. While NPCI has the infrastructure for 500 million daily transactions, outages occurred even on days with lower volumes. Public sector banks, particularly SBI showed higher Technical Decline (TD) rates, dragging down the platform’s performance. 

Though NPCI launched UPI Lite for low-value transactions, it had limited adoption. Experts believe that unless systemic changes are made, including reviving the New Umbrella Entry (NUE) framework and improving bank infrastructure, such outages will persist. The extension of the Third Party Application Provider (TPAP) transaction cap deadline to 2026 further stresses the need for competition and redundancy in the ecosystem.