PhonePe UPI payments disrupted following heightened cybersecurity drills

PhonePe, one of India’s largest digital payment platforms, suffered an outage on Monday evening that disrupted UPI (Unified Payments Interface) transactions for over an hour, following a network capacity shortfall at a newly activated data centre.

The disruption came amid heightened tensions between India and Pakistan, which escalated last week and prompted a series of cybersecurity drills across critical infrastructure and private networks in India.

"In light of the escalation of the conflict last week, at PhonePe we initiated active DR [disaster recovery] drills, with heightened cybersecurity measures on our network firewall," said Rahul Chari, Co-founder and CTO of PhonePe, in a social media post following the incident.

"This evening, 100% 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. We have now rebalanced our traffic across our other sites and are seeing the recovery. Our apologies for this. We assure to take these learnings and further strengthen our systems."

Users took to social media to report transaction failures on the PhonePe app, beginning around 6:30 p.m. IST, coinciding with peak payment hours.

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PhonePe, a Walmart-backed entity, processes nearly half of all UPI transactions in the country and is a critical part of India’s digital payments infrastructure.

Earlier this year, UPI services witnessed multiple outages caused by backend issues at partner banks, particularly due to repeated and redundant requests for payment verification. Excessive authentication loops overwhelmed the system during high-traffic periods, leading to transaction delays and failures across several apps.

Industry experts attributed the disruptions to the lack of standardisation in how banks handle UPI request flows, prompting calls for tighter coordination between payment apps and banking partners.