India’s much-lauded Unified Payments Interface (UPI) faced another major outage this past weekend, leaving millions of users across the country unable to complete transactions. The National Payments Corporation of India (NPCI), which operates the platform, attributed the disruption to “intermittent technical issues”. But Saturday’s failure is far from a one-off — it marks the third such disruption in recent weeks, and the sixth in the past year.
This string of outages has triggered growing concern among users, businesses, and financial experts alike, as UPI is no longer a mere convenience — it has become an essential infrastructure, central to India’s cashless economy. With nearly 600 million transactions taking place daily on the platform, even a short downtime can bring business to a grinding halt, affecting everyone from high-street retailers to street vendors.
To NPCI’s credit, the digital revolution it has championed is nothing short of extraordinary. Over the past decade, UPI has transformed the way Indians pay, making digital transactions seamless, swift, and ubiquitous. For many Indians, the mobile phone has entirely replaced the wallet. But such success also brings immense responsibility — one which NPCI appears to be struggling with, as technical issues become alarmingly frequent.
Last week, NPCI assured the public that it had conducted a “root-cause analysis” of earlier disruptions. That promise now rings hollow. If a solution had truly been found, why have these glitches returned with such frequency? It is now imperative that more fundamental and probing questions are asked — not just of NPCI, but also of the Reserve Bank of India (RBI), which oversees the payments ecosystem.
One possible reason floated for these outages is a sudden surge in transaction volumes. If true, it highlights a capacity issue that NPCI must address with urgency. The UPI network should be resilient enough to handle peak loads without crumbling. After all, the cost of disruption is steep — it hits consumer confidence, reduces business income, and ultimately undermines trust in the digital economy.
The RBI, too, must bear some responsibility. Known for its rigorous oversight of banks and non-bank entities, it appears surprisingly lenient when it comes to NPCI. The central bank must take the lead in ensuring robust governance and performance standards for such a critical platform. Its role must go beyond regulation — it must also be the guarantor of reliability.
The broader structure of the UPI ecosystem is another pressing concern. NPCI’s centralised role effectively makes it a monopoly in the digital payments settlement space. Even more troubling is the market configuration beneath it: two third-party payment service providers now dominate nearly 90% of the UPI market, forming a near-duopoly. This concentration risk cannot be ignored any longer.
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Years ago, the RBI proposed the creation of ‘umbrella entities’ to challenge NPCI and introduce competition into the system. But the plan has seen little progress. Given NPCI’s extensive ownership — it is a not-for-profit backed by a consortium of banks and financial institutions — setting up viable rivals will not be straightforward. Still, the effort is worth making. Competition can drive resilience, innovation, and ultimately, greater user trust.
Another debate the government can no longer delay is that of funding. UPI remains free for users, but who pays for the infrastructure? A fair and sustainable merchant discount rate (MDR) — perhaps modest, yet competitive — would enable service providers to invest in capacity and reliability, and reduce dependency on state support.
India’s digital payments journey is a remarkable success story. But its credibility hinges on consistency. If outages persist, confidence will erode — and with it, the dream of a truly cashless economy. It is now up to NPCI, the RBI, and policymakers to ensure that what has been built with such promise is not undermined by complacency or structural fragility.
