UPI Outage: NPCI Asks Banks to Limit Transaction Checks

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NPCI asks Banks to Limit UPI outage Transaction Checks. In a move aimed at preventing future digital transaction disruptions, the National Payments Corporation of India (NPCI) has issued a circular to PSP (Payment Service Provider) and acquiring banks. This comes on the heels of a recent mega UPI outage that affected thousands of users across India. The NPCI emphasized moderation in the use of application programming interface (API) requests, particularly in the context of repeated transaction checks, which have led to overloads on the UPI infrastructure. The directive seeks to balance transaction monitoring with infrastructure efficiency, ensuring faster response times and minimizing failures.

The circular notes that some PSP banks were sending excessive “check transaction status” API calls at an extremely high Transactions Per Second (TPS) rate, contributing to queue congestion and eventual failure of UPI systems. As a remedy, NPCI mandates that PSP banks delay their first status check API by at least 90 seconds after initiating a transaction. Furthermore, only a maximum of three status check calls should be made, ideally within two hours of the initial request. After this period, banks must rely on NPCI’s settlement files or the UDIR system to track transaction completion.

The NPCI also demanded immediate auditing by CERT-IN empanelled auditors and encouraged implementation of rate-limiters on certain UPI APIs to control traffic. The urgency of this regulatory action reflects the growing pressure from both public and government entities. Notably, Finance Minister Nirmala Sitharaman has asked NPCI to reinforce UPI’s robustness and address existing infrastructure gaps. With India’s UPI system emerging as one of the world’s largest real-time payment platforms, the NPCI’s actions underline the critical need for resilient, well-managed backend systems.

1. Understanding NPCI and the UPI Infrastructure

1.1 What is NPCI?

The National Payments Corporation of India (NPCI) is a not-for-profit umbrella organization formed under the guidance of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA). Incorporated in 2008, NPCI aims to facilitate retail payment and settlement systems in India. It is the brain behind major payment innovations including RuPay, IMPS, and more importantly, the Unified Payments Interface (UPI).

1.2 Revenue and Operational Model

NPCI operates as a Section 8 company under the Companies Act, 2013. Its revenue model is transaction-driven, earning minimal fees per transaction processed through its various platforms. Despite its not-for-profit status, NPCI operates with enterprise-grade infrastructure, driven by efficiency and reliability.

1.3 Founders and Leadership

Though NPCI itself does not have conventional startup founders, it was conceived by a joint initiative between the RBI and IBA. Today, its leadership is steered by Dilip Asbe, who serves as the MD and CEO. Asbe is a key figure in India’s fintech revolution, spearheading innovations that have transformed digital payments in the country.

1.4 UPI: NPCI’s Flagship Product

Launched in April 2016, UPI has become the backbone of India’s digital payments ecosystem. It enables real-time peer-to-peer and merchant payments through mobile devices. UPI integrates multiple bank accounts into a single mobile application, combining several banking features, seamless fund routing, and merchant payments under one platform.

2. Background: What Triggered the New Guidelines?

2.1 Rise of Transaction Failures

The UPI platform faced a significant outage on April 12, 2025. Over 2,387 users reported issues related to transaction delays and failures, making it one of the largest public complaints related to UPI this year. These disruptions highlighted how backend inefficiencies, especially during peak hours, can affect millions.

2.2 UPI Outage Transaction Checks: The Core Issue

One of the root causes of the UPI outage was the excessive use of transaction status check APIs by PSP banks such as Google Pay, PhonePe, and Paytm. These banks repeatedly pinged NPCI’s servers with API requests to check transaction statuses at rates that exceeded infrastructure capacity.

3. NPCI’s Directives in Response to Outages

3.1 Regulating API Use

The NPCI has now instructed that the first transaction status API should only be triggered 90 seconds after the original transaction. Moreover, PSP banks should not trigger more than three status checks per transaction within a two-hour window. Any checks beyond this must use settlement files or the UDIR channel.

3.2 Infrastructure Load Management

Excessive API calls not only strain the servers but also lead to long queues and system failure. By introducing these limitations, NPCI aims to manage transaction throughput and optimize system performance.

3.3 Certification and Auditing

The NPCI has made it mandatory for PSP banks to conduct audits through CERT-IN empanelled auditors. This ensures transparency and validates whether the new guidelines are being effectively followed.

4. UDIR and URCS: New Tools for Resolution

4.1 What is UDIR?

The Unified Dispute and Issue Resolution (UDIR) system is a backend mechanism that allows PSP banks to check the final settlement status of transactions via URCS (UPI Backoffice). If the standard transaction status API does not yield results within two hours, banks are advised to use UDIR.

5. Industry Reactions and Government Stand

5.1 Ministerial Concern

Finance Minister Nirmala Sitharaman has taken a proactive role in addressing the matter. She emphasized the urgency of reinforcing UPI’s reliability and advised NPCI to plug infrastructure loopholes immediately.

5.2 Stakeholder Engagement

NPCI has also asked UPI app operators and acquiring banks to avoid making public comments about system failures. The focus is now on internal remediation and operational efficiency.

6. Impact on the Indian Fintech Ecosystem

6.1 Operational Shifts

With these regulations in place, fintech companies and banks will need to revise their backend API strategies. This could affect transaction speeds temporarily but will strengthen the system in the long run.

6.2 Public Trust in UPI

Despite the recent glitch, UPI remains a globally admired digital payment system. However, maintaining consumer trust will require systemic improvements and consistent uptime.

7. Learning for Startups and Entrepreneurs

7.1 Infrastructure is as Important as Innovation

No matter how groundbreaking your service is, weak backend systems can crumble customer experience. Startups must invest in scalable, robust infrastructure from day one.

7.2 Proactive Compliance Prevents Crises

Ignoring small inefficiencies and delaying regulatory compliance can lead to operational chaos. Always follow best practices and keep auditing systems in place.

7.3 Rate Limits Are Not Roadblocks

Instead of seeing limitations as barriers, treat them as safeguards. Smart throttling and controlled access can enhance system reliability and user satisfaction.

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