UPI Outages March-April 2025: Causes and MDR Issue
Why in the news
Repeated UPI disruptions in March-April 2025 exposed the load on NPCI and the weak incentives for banks.
Key facts
- UPI runs on the IMPS architecture and is interoperable across banks and apps like GPay and PhonePe.
- Every transaction routes through NPCI, which encrypts PINs and manages flows.
- Outage cause: banks bombarded NPCI with “check transaction” queries; UPI Lite is hit too.
- NPCI is a consortium mostly owned by public sector banks, under the Payment and Settlement Systems Act, 2007.
Why banks are unhappy
- Peak day: 58 crore transactions worth ₹73,000 crore.
- Banks spend about ₹0.80 per payment but cannot charge MDR, the fee merchants pay for processing; UPI and RuPay debit have zero MDR.
- Uptime commitments are weaker than Visa or MasterCard; MeitY’s yearly incentive scheme rewards good performers and withholds subsidy from poor ones.
Exam angle
- Full forms: UPI, NPCI, IMPS, MDR; UPI Lite limit ₹2,000.