Context:
On Saturday, April 12, the Unified Payments Interface (UPI) experienced its third major outage in as many weeks, leaving thousands of users across India unable to complete payments or fund transfers. Leading platforms including Google Pay, PhonePe, Paytm, and several banking apps were affected, with users reporting high transaction failure rates.
NPCI’s Response
The National Payments Corporation of India (NPCI), which manages UPI, acknowledged the issue via X (formerly Twitter), citing “intermittent technical issues” and assured users that it was working to resolve the problem.
Scale of the Outage
- According to Downdetector, over 2,000 complaints were logged around noon.
- Most complaints involved payment failures and delays in fund transfers.
Root Cause
Banking sources linked the outages to unprecedented transaction volumes, driven in part by a surge in gaming and betting activity associated with the IPL 2025 season (March 22–May 25).
- March 2025: UPI recorded 18 billion transactions (up from 16 billion).
- April 2025 (so far): Daily transactions exceeded 600 million, compared to the usual 500 million.
Concentration Risk and Structural Concerns
Industry insiders have flagged a concentration risk, with NPCI being the sole operator of UPI:
- NPCI CEO Dilip Asbe aims for 2 billion transactions per day by 2030.
- However, the absence of alternative infrastructure creates a bottleneck during peak demand.
- The Reserve Bank of India’s (RBI) earlier plan for a National Umbrella Entity (NUE) to decentralize the digital payments ecosystem was shelved, heightening systemic dependency on NPCI.
Revenue Challenges in UPI Ecosystem
With UPI operating under a zero-MDR (Merchant Discount Rate) policy enforced by the government:
- Fintechs and banks struggle to monetize UPI transactions.
- Lack of transaction-based revenue has made platform scalability and infrastructure investment financially challenging.
What This Means for India’s Digital Economy
The repeated outages underscore a critical need for infrastructure diversification, especially as India’s digital payments scale rapidly. With financial inclusion and real-time payments being central to India’s fintech strategy, reliable uptime and sustainable business models are now non-negotiable.
