PhonePe UPI payments disrupted as new data centre fails to handle rush
'Given the escalation of the (India-Pakistan) conflict last week, at PhonePe we initiated active DR (disaster recovery) drills, with heightened cybersecurity measures on our network firewall. This evening, 100% of our traffic across all our services was being routed through a new data centre,' Chari said.'Unfortunately, the Monday evening peak traffic exposed a network capacity shortfall, causing transactions to fail.' The company said it has redirected traffic to other servers and reported that services are gradually coming back online.
PhonePe users took to X to express their frustration, reporting issues with person-to-person (P2P) transactions and the inability to find accounts linked to UPI IDs during the disruption.
As the outage continued, Paytm CEO Vijay Shekhar Sharma highlighted that Paytm, the third largest UPI app with an 8% market share, was running smoothly and handling double the usual transaction volume.
Previous outages
PhonePe, owned by Walmart, processed 8.3 billion transactions in April 2025, holding over 45% of the UPI market share. In April, UPI settled more than 17 billion transactions.
This disruption follows two major outages on the UPI platform managed by the National Payments Corporation of India (NPCI) in late March and April. These incidents were triggered by a surge in transactions driven by betting apps and gaming platforms during the Indian Premier League (IPL).An NPCI analysis found that banks were repeatedly pinging the network's backend to verify transaction statuses, leading to system congestion.
The recurrent outages on UPI apps like PhonePe have sparked concerns about the concentration risk within India's digital payment system. With UPI becoming the default retail payment method, PhonePe and Google Pay together account for around 75% of the UPI market. The incident has reignited discussions about the robustness of the UPI infrastructure amid growing digital payment volumes in India.
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