UPI Transactions to Become 50% Faster Starting This June

The NPCI is promising to cut the time required to complete a UPI transaction, and in half, to 15 seconds. This is good news for UPI services, which have been running into intermittent troubles during peak hours due, at least in part, to the amount of time taken to process various intermediating steps. The new mandate is definitely a step in the right direction. But whether it will translate into a better experience for users remains to be seen.

In practical terms, when a customer employs an application such as PhonePe or Paytm to scan a QR code and transact with a merchant, the request for that transaction is sent from the sender's bank to the recipient's bank through the NPCI network. The entire process from sender to recipient, including the all-important confirmation that completes the transaction, has been made faster and more efficient.

Smoother Transaction Status and Reversal Processes

Apart from the accelerated payment completion time, verifying a transaction's status and starting any needed reversals are also getting faster. In the past, acquiring banks or payment service providers (PSPs) had to wait 90 seconds before they could even check to see if a payment was successful. Now, they check after 45 to 60 seconds.

TechFini co-founder Jai Kumar explains that the previous delay allowed avoiding the premature or redundant status checks that can load a system too much too soon. Everything is on track now, he says, and the new transaction timeline is better aligned with the kind of efficiency that the company and its users expect. Kumar hints that the service should recover soon, and in the not-too-distant future, have a kind of reliability you can stake your lunch on.

For end users, the new standards mean a much more smooth and well-functioning experience. Transaction failures mostly happen in the 3-5% of transactions due to network or handshake-related failures. Shoppers will not have to wait 90 seconds anymore before they or their bank can do anything about a payment that has gotten stuck. We will handle ambiguity in digital transactions more effectively and with fewer words. This move should earn us even more trust in using the digital payments ecosystem.

Will There Be Downtime?

A quicker system isn't by definition a fragile system. Even though the new expectations for the UPI network are quite a bit tighter, its infrastructure is considered by many to be well-equipped to handle the new demands.  Rahul Jain, CFO of NTT DATA Payment Services India, has a very optimistic perspective on this.  He said that the digital framework supporting  UPI is mature and resilient enough to accommodate the new changes and that it is not likely to have any significant hiccups.

NPCI has introduced a system of financial penalties for banks or payment players that do not meet the new standards to ensure consistency and compliance. Depending on the seriousness or how often they happen, these penalties can differ and are meant to further ensure that everyone in the ecosystem sticks to the rules.