The disruption began around 7:00 pm IST, with users across the country reporting failed transactions and error messages on their UPI apps. PhonePe, which processes nearly half of all UPI transactions in India, was particularly affected. According to PhonePe’s co-founder Rahul Chari, the outage was triggered by a network capacity shortfall at a new data centre that was handling 100% of the platform’s transaction load. This was part of a disaster recovery drill initiated after recent geopolitical tensions, which inadvertently exposed the centre’s inability to handle peak traffic.
As the outage unfolded, users flooded social media with complaints about failed payments and inaccessible accounts. Downdetector, a service that tracks online outages, recorded a sharp spike in UPI-related issues, with hundreds of complaints in a short span.
PhonePe: The most severely impacted, with users unable to send or receive money, pay merchants, or access linked accounts.
Google Pay and Paytm: Users also reported issues, though Paytm’s CEO claimed their app was running smoothly and handling double its usual volume.
Banking Apps: Some users faced problems on mobile banking platforms of major banks like SBI, HDFC, and Axis Bank, indicating the ripple effect across the UPI ecosystem.
Merchants: Many merchants relying on UPI for payments experienced losses and delays during peak business hours.
The immediate cause was a network capacity issue at PhonePe’s new data centre, which was under stress due to all traffic being routed there during a disaster recovery and cybersecurity drill. However, this is not an isolated incident. UPI has faced multiple outages in recent months, often triggered by surges in transaction volumes-especially during events like the IPL, when betting and gaming apps drive up backend traffic.
NPCI, the body that manages UPI, has acknowledged these recurring issues and recently issued new guidelines to improve the robustness of the system, including reducing API response times and preventing misuse of backend systems.
UPI is the default payment method for millions of Indians, with over 18 billion transactions processed in March 2025 alone. PhonePe and Google Pay together account for about 75% of this volume, making any disruption to these platforms a national issue. The outage not only inconvenienced individual users but also affected businesses, small vendors, and the broader digital economy.
PhonePe redirected traffic to other servers and began restoring services within an hour, with most users able to resume transactions by late evening. Paytm and some banking apps remained operational, absorbing some of the extra transaction load.
The repeated outages have sparked debate about the concentration risk in India’s digital payments ecosystem, where a few apps dominate the market. As UPI adoption continues to grow, experts and regulators are calling for:
Greater diversification among payment providers
More robust disaster recovery and cybersecurity protocols
Improved infrastructure to handle surges in transaction volumes
NPCI’s recent directives are a step in this direction, but the incident highlights the urgent need for continued investment and oversight to ensure the reliability of India’s digital payment lifeline.
