Transaction failures have develop into far more frequent in India’s digital payments ecosystem more than the final couple of months than they have been historically. While the sudden surge in digital usage throughout the Covid scare was an crucial element, market executives stated the burgeoning quantity of entities in the market place whose systems are not normally speaking to every single other may well also have played a component.
As the volume of transactions by means of digital channels surged, method outages across banks became nearly a month-to-month function final year. According to information from Downdetector.in, the 3 biggest banks in the digital payments method collectively saw 61 situations of outages in between March 2020 and so far in February 2021. State Bank of India (SBI) saw the maximum quantity of outages – 43 – followed by ICICI Bank (12) and HDFC Bank (6).
In an emailed response to FE’s queries, an ICICI Bank spokesperson stated, “We have invested in robust infrastructure to execute the digital transactions of our customers. In fact, as per NPCI (National Payments Corporation of India) data, among large commercial banks, in terms of volume of transactions, ICICI Bank has the lowest average technical decline percentage in the nine months from April 2020 to December 2020.” SBI and HDFC Bank did not respond to queries as of press time.
Payment market executives stated that the emergence of new-age players such as Google Pay and PhonePe as various new consumer interfaces in the absence of fast infrastructure upscaling by banks is top to troubles. Madhusudanan R, cofounder, YAP by M2P Solutions, stated that if one requires the instance of Unified Payments Interface (UPI), the players who are coming in are consumer-facing units, but the balances are nevertheless in bank accounts. “For the bank infrastructure to process all these transactions and manage it is becoming tough. Obviously, banks are trying to scale up, but the underlying core banking systems and how those systems talk to each other is not geared for such a load,” he stated.
To place this in point of view, two years ago, the quantity becoming processed by means of cards was $one hundred billion, but today more than UPI it is of the order of $1 trillion. As a outcome, failures now plague even higher-stake transactions, such as share allotments throughout initial public offerings (IPOs), exactly where millions of folks are initiating transactions all at after.
The various hops involved in every single transaction increases the odds of failure and that will have to be corrected, stated Mahesh Ramamoorthy, MD – banking options, FIS India. “Today, because of the sheer number of entities that you have in the system, you will always have hops in a single transaction,” he stated, adding that wallets handle to provide far better client experiences on account of their practicality and the shorter payment flows, whereas in a direct-to-account method like UPI spread across various entities, any transaction is dependent on various hops and the availability and response across the payment chain.
Things may well will need to evolve to a stage exactly where if a transaction fails with Bank A, it is automatically routed to backup Bank B, so that the transaction is completed and the encounter is retained. More importantly, market stakeholders, specifically the NPCI, banks and non-bank players, will have to come collectively to model what type of scale they strategy to obtain more than a period of time and the type of infrastructure that would entail, Ramamoorthy stated. “I think it calls for structured planning that revolves around predictability and scalability. The planning is about understanding how the growth of transactions is projected and anticipated payment flows that fuel the growth”, he stated.
The market will have to also increase its dispute resolution mechanisms in order to retain the faith of the customer in digital payments, stated Madhusudanan. “There are a lot of tricky questions from the user’s perspective when a transaction fails. I could end up paying twice and the merchant could be tricked into believing they have got the money even when they have not. These things create a trust deficit in the ecosystem and we need a lot of work in these areas,” he stated.