‘No systemic failures in UPI’: Phi Commerce’s Rajesh Londhe on rising challenges in real-time payments

UPI transactions: India’s real-time digital payments system closed 2025 on a record-breaking note, with Unified Payments Interface (UPI) transactions touching an all-time high in December. Data released by the National Payments Corporation of India (NPCI) shows that UPI processed 21.63 billion transactions during the month, marking the highest-ever monthly volume on the platform and a 29% year-on-year rise.

In value terms, UPI transactions in December amounted to Rs 27.97 lakh crore, underlining the platform’s deepening role in both low-value daily payments and higher-ticket transactions. On average, UPI handled around 698 million transactions every day, with the daily transaction value averaging ₹90,217 crore — figures that highlight the sheer scale at which India’s digital payments infrastructure now operates.

The milestone reinforces UPI’s position as the backbone of India’s retail payments ecosystem, spanning everything from peer-to-peer transfers and merchant payments to subscriptions, bill payments and credit-linked products. However, the surge in volumes has also brought challenges into sharper focus. Alongside record usage, consumer complaints related to failed transactions, delayed confirmations and refunds have risen, drawing attention to stress points within the fast-expanding ecosystem.

Rajesh Londhe, Co-Founder and Head of Payments at Phi Commerce, said these issues do not point to systemic weaknesses in UPI itself. “UPI has scaled at an unprecedented pace, and the underlying ecosystem depends on multiple participants — banks, apps, NPCI rails and merchant systems — working in perfect sync,” he said. According to Londhe, most problems stem from reconciliation delays and response-time gaps between ecosystem participants, which become more visible when transaction volumes spike. Even small latency or timeout issues can lead to delayed confirmations and refunds. “The system needs deeper real-time visibility and faster exception handling, not just higher throughput,” he added.

At the same time, the growing reliance on digital payments has been accompanied by a sharp rise in fraud attempts. Londhe noted that fraudsters are increasingly using deepfakes, spoofing techniques and AI-generated voice or video messages to target users. “We are seeing more impersonation-led fraud, fake customer support calls and QR-code manipulation. These scams look far more authentic and personalised,” he said, adding that fraud is shifting from technical exploits to large-scale social engineering, where users are tricked into authorising genuine transactions.

Another emerging concern is “subscription leakage”. As India moves toward a subscription-first economy — spanning OTT platforms, SaaS tools, utilities and education services — users often lose track of recurring mandates. “With one-click consent and no unified view, small recurring debits quietly add up,” Londhe said, pointing to a lack of transparency and user-level control rather than malicious intent.

Buy Now, Pay Later (BNPL) products are also gaining traction, particularly among younger users. While BNPL lowers the psychological barrier to spending, risks arise when consumers accumulate multiple BNPL commitments across platforms without a consolidated view of exposure. “Payment systems execute transactions efficiently, but they don’t assess affordability,” Londhe warned, noting that overspending can build up before users realise it.

Looking ahead, Londhe said the next phase of India’s payments evolution must be driven by intelligence-led infrastructure. Predictive monitoring, real-time data sharing, smarter routing and AI-driven reconciliation will be critical to improving reliability at scale. NPCI and the government, he noted, have already begun laying the groundwork for such changes.

For users, Londhe offered one simple piece of advice: pause before approving a transaction. “Most fraud succeeds because urgency overrides judgment. That pause is often the strongest defence.”