A Temporary Reprieve
In India's fast-moving digital payment landscape, the only thing growing faster than transaction volumes is the complexity of its regulation. The Reserve Bank of India (RBI) has, over the years, introduced several frameworks to govern recurring payments
made via cards and the Unified Payments Interface (UPI). These rules, designed to enhance customer security with measures like e-mandates and additional factor authentication (AFA), have often been accompanied by deadline extensions. These extensions give banks, payment gateways, and merchants more time to comply with new technical requirements. While this provides immediate relief, preventing a sudden cut-off of services and revenue, it papers over the cracks of a system under immense strain.
The Real Issue: Staggering Failure Rates
The core problem isn't the regulations themselves, but the system's inability to execute them smoothly. Failure rates for recurring payments, particularly through UPI AutoPay, have been alarmingly high, sometimes reaching between 55% and 90% depending on the bank. This means for every ten subscription renewals attempted, as many as nine might fail. The reasons are varied, ranging from insufficient customer funds to technical glitches, server timeouts, and integration issues between different players in the payment ecosystem. For businesses in the subscription economy—from OTT platforms to SaaS providers and ed-tech companies—this translates directly into involuntary churn, lost revenue, and a frustrating customer experience.
Why a Stopgap Isn't a Solution
An extension is a stopgap, not a solution. It delays the inevitable cliff-edge but does nothing to fix the underlying infrastructure and process weaknesses. The high failure rates show a disconnect between regulatory intent and on-the-ground reality. While consumer protection is paramount, the friction introduced by some of these security measures has made recurring payments unreliable. This forces businesses to rely on less efficient methods, such as sending manual payment links or encouraging customers to switch back to card payments, which defeats the purpose of seamless, automated systems like UPI AutoPay. It also damages trust; when automated debits fail or, conversely, occur without clear user consent, it erodes confidence in the entire digital payment ecosystem.
Building a More Resilient System
Resolving the crisis of failed payments requires a multi-pronged approach that goes beyond simply extending deadlines. First, there needs to be a concerted effort to improve the back-end infrastructure. This involves banks investing in more robust, scalable systems that can handle peak transaction loads and communicate effectively with payment gateways and merchant systems. Second, standardisation is key. Creating uniform protocols for how e-mandates are registered, modified, and executed across all UPI apps and banks would reduce errors and improve interoperability. Finally, consumer communication needs to be clearer. Both banks and merchants must provide transparent notifications before a debit occurs and simple, accessible ways for users to manage or cancel their subscriptions, turning payment anxiety into predictable commerce.
