Sasmit Patra: How India can lower UPI risks for the next decade
Mint - Opinion · Published 9 November 2026 · Last updated
India must build an independent backup UPI switch and enforce app concentration limits to safeguard real‑time payments over the next decade.
Key points
- UPI marked its 10th anniversary in August 2025, recording 24,162 crore transactions worth ₹314 trillion in FY 2025‑26.
- More than 80 % of India’s digital payments now flow through a single NPCI‑operated switch.
- In the three weeks before 12 April 2025 the switch suffered four outages, the longest lasting several hours due to banks flooding it with automated status queries.
- NPCI runs ISO 22301‑certified data centres in Chennai and Hyderabad, but the April 2025 outage stemmed from switch‑capacity overload, not a data‑centre failure.
- RBI warned of single‑operator risk in June 2018 and, in 2019, recommended a standby rail for financial stability.
- A 2020 framework created a “New Umbrella Entity” as a second operator; six consortia applied but the plan stalled in April 2023 due to lack of innovation.
- NPCI’s 2020 proposal to cap any third‑party app’s share at 30 % has been extended twice, most recently to 31 December 2026.
- The author proposes a backup switch built as a resilience utility with independent architecture, possibly run by IFTAS’s INFINET or a new not‑for‑profit NPCI‑style entity under the Payment and Settlement Systems Act, 2007.
- Short‑term fallback could use NFC‑based UPI and UPI Lite X offline payments, mandating them when the primary switch is down.
- Greater transparency is urged: NPCI should publish post‑incident reports, quarterly availability metrics, and conduct ecosystem‑wide fail‑over drills.
Background
- UPI was launched in 2016 as a real‑time payment interface managed by NPCI.
- By FY 2025‑26 it handled over 80 % of digital transactions, making the single‑switch architecture a systemic critical point.
- RBI’s 2018 caution highlighted the vulnerability of a sole retail payments operator.
- In 2019 RBI formally suggested an alternative rail to ensure payment system stability.
- The 2020 New Umbrella Entity framework sought a second operator; six consortia responded but implementation stalled in 2023.
- Recent AI‑driven payment agents and growing app concentration have renewed calls for a standby rail.
UPSC relevance, Prelims facts and Mains angle for this issue are in the full SWAदेSH note.
Original report: Mint - Opinion