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Mid-sized bank customers in the country experienced a rise in the rate of Unified Payments Interface (UPI) transaction failures last year. The latest data from the National Payments Corporation of India (NPCI) shows that customers of RBL Bank, India Post Payments Bank (IPPB), Punjab & Sind Bank, Bandhan Bank and Central Bank of India remained troubled. On the part of remitter banks, Baroda UP Bank had the highest technical default (TD) rate at an average of 16% between May 2023 and April 2024, followed by RBL Bank, Andhra Pragati Gramin Bank and IPPB at 5.3%, 4.9% and 4.47%, respectively, reported Financial Express.

Two big reasons came to light

According to the report, on the beneficiary banks' side, Baroda UP Bank again topped the list with a technical default rate of 12%. Punjab and Sind Bank, Bandhan Bank, RBL Bank and IPPB are included in the top-10 list with TD rates in the range of 2.4%-3.1%. Two major reasons have come to light for UPI transaction failure. One, technical default and second, business decline. Technical defaults are caused by network-related problems on the part of the bank or NPCI. The business decline is caused by customer errors such as entering an invalid PIN or wrong account number or exceeding the per transaction limit.

The RBI governor said

 On June 7, Reserve Bank of India (RBI) Governor Shaktikanta Das said in a press conference after the monetary policy committee meeting that whenever there is a disruption in UPI services, the problem is not from NPCI or UPI, but from the bank's side. Thousands of UPI transactions happen at the same time and they have to go through many loops within nanoseconds, so some banks facing technical challenges may get high technical default rates.

Banks or lenders must ensure that their servers can handle thousands of transactions at the same time, and ANPCI must ensure that its servers can correctly identify and switch transactions. Banks are working on this issue on their part.