Insufficient balance, wrong PIN top reasons for failed digital transactions

Nearly ten per cent of Indian digital transactions are declined monthly across four modes of payments, data from the country’s flagship payments processor show.

This includes Immediate Payments Service, Unified Payments Interface, transactions in automated teller machines (ATMs) passing through the National Financial Switch (NFS) network, and welfare scheme transfers under the Aadhaar-enabled Payments System (AePS) for the period August to November 2021.

About 7.6 per cent of digital transactions are declined due to business reasons, like insufficient balance, incorrect PIN, 'Do Not Honor' (when the recipient does not authenticate) and so on. Only 1.7 per cent of transactions are declined due to technical reasons such as connectivity issues, switch unavailability, invalid response and other reasons, data from the National Payments Corporation of India shows.

Among the four modes, Aadhaar-based AePS has the highest rate of declines, with 5.2 per cent of all initiated transactions junked due to technical reasons, and 16.9 per cent due to business reasons. ATM transactions have the second-highest rate, followed by IMPS and UPI.

Only 83 per cent of ATM transactions go through successfully as close to 15 per cent face business declines and close to 2 per cent face technical declines.

UPI transactions by value have now crossed Rs 7 trillion per month, and 1-2 per cent of initiated transactions declined due to technical reasons. But as much as 6.8 per cent of UPI transactions face business declines, suggesting that the popular peer-to-peer and peer-to-merchant small ticket transaction platform is facing more difficulties due to user behaviour than banking system issues.