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    Brief Study On UPI Transactions Failure Rates

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    Pranjal Jaiswal

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    Brief Study On UPI Transactions Failure Rates

    Uploaded by

    Pranjal Jaiswal
    11 views4 pages

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    Brief study on UPI transactions failure rates

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    11 views4 pages

    Brief Study On UPI Transactions Failure Rates

    Uploaded by

    Pranjal Jaiswal

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    Brief study on UPI transactions failure rates (Jan’20 to Oct’20)

    1. Increase in transaction volume:


    UPI volumes have increased significantly, post April’20 and the volumes in Oct’20
    was 66% more than those observed in Mar’20.

    VOLUME OF TRANSACTIONS (IN CRORE) 207.16


    180.01
    161.88
    149.74
    130.5 132.57 133.69
    124.68 123.45
    99.96

    Jan'20 Feb'20 Mar'20 Apr'20 May'20 Jun'20 Jul'20 Aug'20 Sep'20 Oct'20

    2. Total declines under UPI:


    UPI declines or failures occur on both remitter side (debit side) as well as on
    beneficiary side (credit side). The declines are further classified as Business declines (BD)
    and Technical declines (TD). The total declines as a percentage of total transactions is as
    follows:

    % of total declines (Remitter/Beneficiery) TD+BD

    12.07 11.72
    10.91
    9.14 9.47 9.41 9.17 9.63
    9.04
    8.37

    Jan'20 Feb'20 Mar'20 Apr'20 May'20 Jun'20 Jul'20 Aug'20 Sep'20 Oct'20
    3. Remitter side declines:
    UPI declines occurring on remitter side ie initiating bank or debiting bank side is
    significantly more than receiving bank side. Technical declines on remitter side have
    increased significantly since Aug’20. This increase may be attributed to increase capacity
    utilization of remitter side infrastructure as there has been a steep increase in 8%, 11% &
    15% in transaction volume month over month during this period.

    % DECLINES (REMITTER SIDE)


    BD% (remitter) TD% (remitter)

    1.85 2.67 2.32


    0.92 0.45 0.99
    1.01 1.13 0.93
    0.57

    7.42 7.93 7.26 7.73 7.45 7.48


    7.09 6.89 6.84 6.99

    JAN'20 FEB'20 MAR'20 APR'20 MAY'20 JUN'20 JUL'20 AUG'20 SEP'20 OCT'20

    4. Bankwise analysis of Remitter side declines:


    10 banks contribute to 77% of remitter side transactions:

    % share of remitter side transactions

    23%
    28%

    3%
    3%
    3%
    9%
    4%
    4%
    9%
    7%
    7%

    SBI Axis HDFC PayTM ICICI PNB BoB BoI Canara Kotak Others
    Bank BD TD
    SBI 7.15% 2.38%
    Axis 3.13% 0.49%
    HDFC 4.88% 0.56%
    PayTM 7.83% 0.05%
    ICICI 5.46% 0.19%
    PNB 7.78% 1.57%
    BoB 8.89% 1.23%
    BoI 7.23% 1.78%
    Canara 13.95% 3.67%
    Kotak 6.65% 1.31%

    SBI and Canara have very high levels of Technical declines, whereas PayTM, BoB &
    Canara have very high levels of Business declines during Jan’20 to Oct’20.

    5. Beneficiary side declines:


    UPI declines occurring on beneficiary side i.e. receiving or crediting bank side are less
    than receiving bank side. Technical declines on beneficiary side have increased significantly
    since Sep’20. This increase may be attributed to increase capacity utilization of receiving side
    infrastructure as there has been a steep increase of 11% & 15% in transaction volume month
    over month during this period.

    % DECLINES BENEFICIERY SIDE


    BD% (beneficiary) TD% (beneficiary)

    1.10 1.02
    0.34 0.38
    0.31 0.41
    0.33 0.30 0.18 0.16

    1.04 0.95 0.90


    0.71 0.72 0.82 0.85 0.80 0.84 0.85

    Jan'20 Feb'20 Mar'20 Apr'20 May'20 Jun'20 Jul'20 Aug'20 Sep'20 Oct'20
    6. Bankwise analysis of beneficiary side declines:
    8 banks contribute to 78% of beneficiary side transactions:

    % share of beneficiery side transactions

    17%
    22%

    3% 15%
    3%
    6%

    8% 13%
    13%

    SBI PayTm ICICI Yes Axis HDFC BoB PNB Others

    Bank BD TD
    SBI 0.66% 1.46%
    PayTm 0.71% 0.04%
    ICICI 0.58% 0.11%
    Yes 0.12% 0.05%
    Axis 0.50% 0.09%
    HDFC 2.02% 0.10%
    BoB 1.29% 0.34%
    PNB 1.36% 0.94%
    SBI and PNB have very high technical declines, whereas for HDFC, PNB & BoB
    business declines are on a high side during Jan’20 to Oct’20.

    7. Conclusion:
    A detailed discussion with select banks will help in understanding the issues more
    clearly, however based upon NPCI data and news reports the issues identified are as follows:
    ➢ High growth in volume of transactions is creating pressure on infrastructure
    ➢ Zero MDR leaves very little incentive to banks to upgrade and maintain infrastructure
    ➢ Concentration of transactions with few banks
    ➢ Absence of incentive and penalties to award / punish participants.
    ➢ PSBs have more share on remitting side in comparison to accepting side, thereby face
    double whammy of flight of their funds, associated business risks and costs incurred
    in maintenance of infrastructure.

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