The UPI ecosystem in India has witnessed remarkable growth in recent years. With the introduction of UPI 2.0, featuring innovations like overdraft facilities and invoice payments, the system has become more versatile. According to recent statistics, UPI is becoming more and more popular than other payment options like credit and debit cards. The Unified Payments Interface (UPI) has become a transformative force in India’s financial environment in the age of digitisation. It has completely changed how we conduct business, making payments quick and simple. However, this growth in utilisation has also been accompanied by a rise in UPI payment failures. Even while the failure rate is still low, it is essential to address and reduce these problems if the UPI ecosystem is to continue expanding. For UPI to continue to provide a seamless and dependable payment experience, cooperation between payment providers and enterprises is crucial.
In this comprehensive guide, we embark on a journey to unravel the complexities of UPI payment failures. We’ll explore how these failures impact businesses and customer retention, the recent trends in UPI payment success, the definition of UPI payment failure, the myriad reasons behind these failures, and the benefits of UPI payments compared to other methods. So, let’s dive deep into the article to know more about it.
Cracking the Code of UPI Payment Failure
UPI payment failure occurs when a digital transaction initiated through the Unified Payments Interface is not completed successfully. To put it simply, the intended movement of monies from the payer to the payee does not take place as anticipated. UPI payment failures can occur for various causes, from technical difficulties to a lack of cash in the payer’s account.
Let’s understand this with an example – Imagine a scenario where a customer uses a UPI app to make a payment for an online purchase. The amount does not go through despite following the correct steps, confirming the transaction, and receiving a payment confirmation message. In this case, the transaction is categorised as a UPI payment failure.
Reasons for UPI Payment Failure
UPI payment failures can be attributed to several factors, each with its nuances. Let’s delve into the most common reasons behind these failures:
1. Insufficient Funds
Amidst the intricate tapestry of UPI payment failure, a preeminent factor often resides in the paltry funds within the payer’s bank account. When the account balance proves inadequate to cover the stipulated transaction amount, it invariably precipitates the unfortunate cessation of the intended financial exchange.
2. Incorrect UPI PIN
A UPI PIN is crucial for authorising transactions. Entering the wrong UPI PIN multiple times can lead to payment failures.
3. Technical Glitches
Technical issues within the payment service provider’s system or the payer’s app can disrupt the transaction process, resulting in failures.
4. Transaction Limit Exceeded
Some UPI apps and banks impose daily or per-transaction limits. If the transaction amount exceeds these limits, the payment may fail.
5. Incorrect UPI ID or VPA
A minor typographical error in the payee’s UPI ID or Virtual Payment Address (VPA) can result in a UPI payment failure. It is crucial to double-check the recipient’s details.
6. Bank Server Issues
Temporary server issues or maintenance activities on the bank’s side can lead to payment failures. These issues are typically resolved swiftly.
7. Payment App Compatibility
Not all UPI apps are compatible with each other. If the payer and payee use different UPI apps, compatibility issues may cause payment failures.
8. Time-Out Errors
UPI transactions have a time limit for completion. If the transaction takes too long to process, it may time out and fail.
9. Server Overload
UPI servers can become overloaded during peak usage periods, causing delays and potentially leading to payment failures.
10. Bank Account Frozen or Blocked
UPI transactions may be declined if the payer’s bank account is frozen, blocked, or flagged for suspicious activity.
How Payment Failures Affect Business and Customer Retention?
Payment failures are not merely hiccups in the digital payment process; they have far-reaching implications for both businesses and customer retention.
For businesses, payment failures entail:
Revenue Loss: When a transaction fails, it directly translates into lost revenue. The sale is not completed, and future transactions with the same customer may be jeopardised.
Operational Challenges: Handling payment failures necessitates additional operational efforts. Businesses must manage customer inquiries and initiate refunds, diverting resources and causing operational hassles.
Customer Dissatisfaction: Failed UPI transactions lead to customer dissatisfaction. In today’s fast-paced world, customers expect seamless transactions. Payment failures erode trust and may result in customer churn.
For customers, payment failures mean:
Inconvenience: A failed UPI payment disrupts the intended transaction, causing inconvenience. Customers may need to repeat the payment process or resort to alternative methods.
Security Concerns: Payment failures may raise security concerns, making customers question the safety of their funds in the digital realm.
Trust Erosion: Repeated payment failures can erode trust in the payment platform or service provider, leading customers to seek alternatives.
Preventing UPI payment failures the Juspay way!
Most of the websites/apps collect UPI payments through UPI intent flow. Let’s take a look at what UPI intent flow is - When a customer lands on a payment page, they have an option to select from various UPI apps, for example - Google Pay, PhonePe, etc. The customer is then redirected to his selected app where he is supposed to complete the payment by entering mpin, post that he will be redirected back to the merchant website/app.
This whole flow takes 7 clicks, that means the UPI payment can fail or the customer can drop-off during any of these 7 instances. What if we tell you that any business can reduce their UPI payment collection process from 7 clicks to just 1 click.
With Juspay HyperUPI, merchants can collect payments within the app itself without redirecting the customer to any other apps, which significantly reduces the number of clicks to complete the payment to just 1 click. Merchants can achieve 90%+ conversion rates and 4X faster payments. Click here to check-out Juspay HyperUPI.
Steps for Customers to Prevent UPI Payment Failures
- UPI payment failures can occur for many reasons, as mentioned earlier. To prevent these failures, it’s essential to:
- Ensure the payer has sufficient funds in their account before initiating a transaction.
- Double-check the accuracy of the recipient’s UPI ID or VPA.
- Use a stable internet connection and keep payment apps updated.
- Keep the UPI PIN confidential and enter it correctly.
- Be aware of transaction limits imposed by banks or apps.
- Monitor transactions and follow up promptly if a failure occurs.
Benefits of UPI Payments
Despite occasional hiccups, UPI payments offer a plethora of benefits that have contributed to their widespread adoption. Here are some advantages of using UPI:
Ease of Use: UPI payments are incredibly user-friendly. Customers can initiate transactions with a few taps on their smartphones, eliminating the need for cash or physical cards.
Interoperability: UPI is interoperable across banks and payment service providers. Users can send and receive money without being restricted to a specific bank.
Security: UPI transactions are secured with two-factor authentication, making them highly secure. The use of a UPI PIN adds an extra layer of protection.
Instant Transfers: UPI enables real-time fund transfers, ensuring that money reaches the recipient’s account promptly.
Bill Payments and More: Beyond peer-to-peer transfers, UPI can be used for bill payments, online shopping, and even booking tickets and services.
Conclusion
In conclusion, while UPI has transformed digital payments in India, understanding and mitigating UPI payment failures is essential for both businesses and consumers. By being aware of the common reasons for failures and following best practices, users can enjoy the benefits of UPI while minimising disruptions. Additionally, leveraging payment operating systems like Juspay can further enhance the reliability of UPI transactions, ensuring a smoother payment experience for all.
FAQs About UPI Payment Failure
1. What happens if UPI fails?
If a UPI transaction is unsuccessful, the intended receiver does not receive the cash and is not transferred. In the event of a UPI failed transaction, the payer’s account won’t be debited.
2. How can I report a failed UPI payment?
You can file a complaint about a failed UPI payment by contacting your bank’s customer care or the UPI app you are currently using. They will help you as you move forward with the process of problem-solving.
3. How do I request a refund for an unsuccessful UPI transaction?
The majority of the time, if a UPI transaction fails, no money is taken from the payer’s account. The UPI app’s customer service or your bank can help you obtain a refund if a deduction happens without a completed transaction. They’ll start the refunding procedure.
4. Are there any additional security measures to prevent UPI fraud?
Yes, there are additional security measures to prevent UPI fraud, including:
- Keep your UPI PIN confidential.
- Ensuring the security of your mobile device.
- Avoid sharing UPI details with anyone.
- Regularly monitor your transaction history for any unauthorised activity.
- Setting transaction limits if available.
