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NPCI bulks up for one billion transactions per day


Mumbai: Anticipating online transactions to soon hit a billion a day, and having had to cope with processing snags recently, the National Payments Corporation of India (NPCI) is overhauling IT systems of all its key payment channels.

The Unified Payments Interface (UPI), Immediate Payment Service (IMPS), Aadhar Enabled Payment System (AePS) and National Automated Clearing House (NACH) have been identified for upgrades and overhauls, people close to the development told The Economic Times. They requested anonymity as these discussions are confidential.

NPCI aims to complete these system migrations by the end of FY21.

“These upgrades are planned keeping not just current concerns in mind, but also the scope for future growth and the related complications,” said one of the persons quoted above.

NPCI’s internal IT team, led by its chief digital officer Arif Khan, has already wound up the upgrades to UPI and NACH systems in January. The work on migrating AePS and IMPS services to new systems will now start with an aim to finish by March, people cited above said.

ET has learnt that upgrades will focus on three key fronts: enhancing capabilities to process increased volumes, greater resilience to external outages seen at banks and an architectural revamp of IT systems to better process credit return pile-ups.

“These could be horizontal upgrades planned to improve not just processing capability but ensure NPCI’s systems run smoothly even when a network partner is experiencing outages as seen at SBI and HDFC Bank in recent months,” said one of the people cited above.

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Emailed questions to NPCI didn’t elicit a response till press time. “NPCI leaders have reached out to payment participants in private forums, requesting patience while these migrations are carried out, as some of these upgrades may face teething issues,” said another person familiar with the matter.

NPCI is learnt to have initiated these upgrades after consultations with external IT firms and payment industry consultants to emulate global best practices.

Interestingly, while NACH was being upgraded earlier this month, lakhs of mutual fund investors saw allotments for NAVs fail as the timing of migration coincided with Securities and Exchange Board of India’s (Sebi) new allotment rules.
ET was the first to report this.

Subsequently, NPCI
apologised to the investor community for the “unfortunate” glitch, which led to failure of at least 7 lakh transactions. NACH systems are now up and running, albeit with some minor delays, people quoted above said. NPCI had also brought out a public circular on January 22, alerting consumers of possible “inconvenience” during 1-3 am for an “upgradation process” on UPI.

Digital Payments Surge

Since the onset of the pandemic, digital payments in India have seen a massive uptick as consumers avoided cash payments. Led by categories such as bill payments and online shopping, UPI emerged as the core payment rail for processing of digital transactions.

In January alone, UPI
processed a record 2.3 billion transactions worth Rs 4.3 lakh crore. NACH processed a record 325 million transactions in December 2020, the latest period for which data is available. AePS, core architecture for most government direct subsidy and relief delivery, too saw a massive uptick, as did IMPS.

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High volumes have coincided with snags. Most notable snags include
mass outages seen at HDFC Bank servers and those
reported by SBI Yono customers in December. Users of payment apps, such as Google Pay and PhonePe, too have voiced concerns recently on social media of increased instances of payment failures on UPI.

Public data on transaction decline rates on UPI alone show an alarming increase in failure rates in recent months. From just a handful of banks reporting technical decline rates of just over 1% before the pandemic, at least 10 banks reported decline rates of over 3% in October, November and December.

Latest data on UPI failure for January shows that while decline rates have now moderated—just three banks with over 3% technical declines—insiders believe there is still room for improvement.





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