India’s largest fintech firm, PhonePe, experienced a major technical outage on Monday evening, leaving millions of users unable to complete transactions. The issue triggered widespread confusion across the country, with many mistaking the failure for a broader disruption in the Unified Payments Interface (UPI) system.
The outage began around 6 PM IST and peaked shortly after 6:15 PM, according to data from the digital services monitoring platform Downdetector. Users reported transaction failures across various services, including payments to merchants, fund transfers, and mobile recharges.
PhonePe co-founder Rahul Chari acknowledged the disruption and attributed it to a network capacity shortfall in a newly deployed data centre. “This evening, 100 per cent of our traffic across all our services was being served through a new data centre. Unfortunately, the Monday evening peak traffic exposed a network capacity shortfall due to which transactions started failing,” he said in a statement.
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Chari added that the company had taken immediate steps to rebalance traffic across its other data centres and that service recovery was underway. He also reassured users that the platform has initiated active disaster recovery (DR) drills and bolstered cybersecurity measures on its network firewall.
“We assure users that we are taking these learnings seriously and will further strengthen our systems to avoid such issues in the future,” Chari emphasized.
While PhonePe has started recovering from the disruption, the incident highlights the increasing dependence on digital payment platforms — and the ripple effect even a short downtime can cause in a country where UPI has become the backbone of everyday transactions.
It is worth noting that the UPI system itself remained functional during the outage. However, confusion prevailed as users linked the failure directly to the UPI infrastructure. The National Payments Corporation of India (NPCI) has not reported any issues with the core UPI network at the time of the PhonePe outage.
This marks the fourth notable disruption involving digital payment services in recent weeks, with UPI experiencing three outages between March 26 and April 12.
As digital transactions become central to India’s economy, fintech companies are under growing pressure to ensure robust and scalable infrastructure to maintain public trust.
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