Disaster Recovery Drill Backfires? PhonePe Hit by UPI Outage

Due to a network capacity shortage brought on by cybersecurity exercises held in the wake of the India-Pakistan conflict, fintech giant PhonePe had an outage on 12 May when it came to processing Unified Payments Interface (UPI) transactions.

For more than an hour on the same day, users and industry stakeholders reported that the PhonePe app was unable to access India's real-time payments system, UPI.

The disruption happened when the Bengaluru-based company started using a new data centre to process all of its transactions for disaster recovery (DR) exercises. Transaction problems were caused by a network capacity deficiency that was revealed by a larger amount of UPI transactions on Monday night.

Drills were Part of Cybersecurity Measures

The purpose of the drills was to test the network firewall's cybersecurity features. According to Rahul Chari, co-founder and chief technology officer (CTO) of PhonePe, the company started active disaster recovery drills at PhonePe with increased cybersecurity measures on its network firewall because of the conflict's intensification last week.

A new data centre was handling all of the firm's traffic that evening across all of its services. Sadly, a network capacity shortage was revealed by 12 May night's peak traffic, which caused transactions to begin failing. The confrontation between India and Pakistan was followed by these active drills.

 For the payments network to operate smoothly in such cases, stronger cybersecurity precautions are needed. A top industry executive went on to say that the disruption was exclusive to PhonePe and that there was no downtime on the UPI network itself.

Paytm Became the Front-Runner

Vijay Shekhar Sharma, the founder of Paytm, claimed in a post on the social media site X that on May 12, the Noida-based company's application was operating without hiccups and handling twice as many transactions as usual.

Paytm's UPI payments are operating without a hitch, Sharma continued. The Paytm app is operational at twice the usual volume. Users experienced four disruptions in recent weeks when attempting to process UPI transactions in March and April.

In an effort to lessen these interruptions, the National Payments Corporation of India (NPCI) released two circulars last month that included application programming interface (API) recommendations. While the second circular provides guidance on how to stop the abuse of APIs related to real-time payments, the first circular concentrates on decreasing response times for four APIs.

With over 864 crore transactions handled in March—nearly half of all UPI traffic—PhonePe was the leader of the UPI ecosystem. Google Pay came next, although Paytm is still widely used, especially by local merchants and small companies, despite having a lower volume.

This most recent issue coincides with government efforts to encourage small sellers to use UPI, including a INR 1,500 crore incentive programme for BHIM app ecosystem usage.