February 19, 2025 · 11 mins read
Santosh Kumar
The Unified Payment Service (UPI) offered by NPCI (National Payments Corporation of India) has become the preferred payment method for millions across the country due to its secure platform and hassle-free payment journey. UPI Payments are increasingly used for peer-to-peer (P2P) and person-to-merchant (P2M) transactions. Since its inception, UPI payments have made investing in the securities market simple.
As there are multiple parties involved in making UPI the fastest payment method, there are times when the UPI transactions fail and amount debited due to a variety of reasons which may come up either due to technical glitches or human errors.
1: Compared to single-factor authentication, where users provide only one factor usually a password or PIN code UPI has Two-Factor Authentication (2FA) that uses an additional layer of safety: biometrics, security tokens, and One-Time Passwords.
2: A Virtual Payment Address (VPA) is a unique ID used to make payments through a UPI app. You will no longer have to repeatedly fill in your bank details.
3: UPI leverages an effortless onboarding process.
Read More:: Difference Between RuPay Credit Card and Visa Credit Card
The amount will be refunded to your account within 3-5 business days from the payment date. Learn why your UPI transaction failed in the 8 common reasons below.
Below are some common reasons behind failed UPI transactions due to human errors:
One of the most common errors that lead to failed UPI transactions is when the user selects one registered bank account on the merchant website while initiating the payment but tries to pay from another unregistered bank account on the payment service provider app. This error is also called a “Third Party Validation” failure.
As per Securities and Exchange Board of India (SEBI) guidelines, users must make transactions only from their registered bank accounts to provide seamless business transactions and secure user data and payments.
Read More:: How Much Money Can We Transfer Through PhonePe?
While making a UPI payment, the user needs to authorise the transaction by entering the unique UPI PIN. If the user enters an incorrect UPI PIN, then the transaction fails. If the user has forgotten the UPI PIN, they can visit the UPI profile on the mobile app, tap the "Forgot UPI PIN" option, and reset it.
. The bank limits the number of UPI Payments made by users. Most banks limit users to 10 UPI Payments per bank account daily. If users have exhausted their limit, they can either use a different registered bank account or retry the transaction after 24 hours with the same bank account.
This is a common reason for failed UPI transactions. It occurs in scenarios where the user tries to make a payment of an amount more than the available balance in his bank account. To avoid such failures, users should always try to check the balance in their bank account before initiating a transaction.
Read More:: How to add money in Phone Pe wallet?
When the user enters his UPI ID (VPA) to make a payment on a merchant app, a notification is sent to the user's payment service provider app (mostly referred to as the PSP App), which must be authorised for a successful payment.
This error occurs when the user does not accept the payment request within the time limit shown on the merchant app. The time limit varies between merchants but is generally between 3 and 10 minutes.
For example:
User ABC initiates payment via Bank A for investing in stocks / mutual funds by entering their UPI ID(VPA) like ‘abc@ybl’. The user will receive a notification on his UPI app to authorise the payment. The time limit for authorising the payment request is 5 to 10 minutes. If the user fails to accept the payment request, the transaction fails.
First, let's start with understanding a UPI ID / VPA (Virtual Payment Address).
VPA is a financial address unique to every user, allowing users to send/receive money in their accounts through UPI.
The benefit of using VPA to transfer money is that the user is not required to share complex bank account details such as bank account number and IFSC code to receive money. Moreover, VPA offers additional security for your transactions since neither the sender nor the receiver can find the bank account details.
The payment fails if the user enters the wrong VPA while doing any transaction. Hence, the user should ensure entering the correct VPA before initiating a transaction. The user can locate the VPA by clicking on the profile section in the PSP App.
Read More:: What is YBL in UPI?
The daily transaction limit is the maximum amount a user can transfer using the UPI payment method on a particular day.
Banks generally have a daily transaction limit of Rs 1 lakh, but it varies from bank to bank. If the user tries to transfer an amount more significant than the limit, their transaction fails; hence, all users should check the daily transaction limit their banks allow to avoid such failures.
The receiver is the person/merchant's bank account to which the money is transferred.
UPI transactions fail if the receiver's account details, such as bank account number, IFSC code, or UPI ID, are entered incorrectly. In such cases, money is debited from the user's account and transferred to the wrong account. This failure is most likely while making P2P (person-to-person) UPI transactions.
Read More:: How to Check CIBIL Score on Phone Pe
The cooling period is a duration implemented by the banks if the user is a first user for UPI Payment or an existing user but has reset his UPI PIN. This is done for security purposes.
The Rs 5000 transaction limit can be transferred for 24 hours, after which the limits are relaxed to normal limits set by banks. If users try to make payments beyond these limits, the UPI transaction fails.
Keep transaction records: Save screenshots or copies of the transaction for reference. Be patient: Refunds can sometimes take a few days to process.
Follow up: If you don’t receive a resolution within a reasonable timeframe, continue to follow up with your bank and NPCI.
Read More:: How does UPI Mandate Work
The Reserve Bank of India (RBI) issued a circular dated September 19, 2019, on harmonising the Turnaround Time (TAT) and customer compensation in case of failed transactions. As per the circular, if the money debited from the customer's bank account does not reverse back to the bank account within the specified time period due to a failed transaction, then the bank is liable to pay a penalty of Rs 100 per day to the customer.
As per the circular, in case of failure of an IMPS, which is a UPI transaction where the customer account is debited but the beneficiary account is not credited, auto-reversal must be done in T+1 day, where T refers to the transaction date. It means that if a transaction fails today, the amount should be credited back to the account of the person initiating the transaction by the end of next working day. If the bank does not credit the amount back to the customer's account by T+1 day, then the bank is liable to pay a penalty of Rs 100 per day for the delay beyond T+1 day.
Similarly, in the case of a transfer via UPI, where the bank account is debited but the beneficiary account is not credited, the beneficiary bank must auto-reverse by T+1. If not, a penalty of Rs 100 per day beyond T+1 is levied.
If you have experienced a failed transaction, you need to check the timeline allowed for your service provider to settle this issue. If they fail to do so within this timeline, you need to lodge a complaint with your service provider or system participant. If they fail to resolve this issue within one month, you can escalate the issue to the Ombudsman under The Ombudsman Scheme for Digital Transactions, 2019. You may reach out to your respective area Ombudsman.
RBI has given different settlement periods depending upon the nature of the money transfer involved. Below is the timeline of auto-reversal by the service provider and the compensation amount you are entitled to in case of noncompliance by the service provider.
Read More:: Rupay Credit Card UPI Charges
To resolve failed UPI transactions, follow these steps:
Check for Sufficient Funds: Ensure you have enough balance in your linked bank account to cover the transaction amount.
Verify Recipient Details: Double-check the recipient’s UPI ID, VPA (Virtual Payment Address), or bank account details to ensure accuracy.
Confirm Internet Connection: Ensure you have a stable Internet connection to prevent network-related issues during the transaction.
Retry the Transaction: If the transaction fails initially, repeat the process after some time, as it might be a temporary issue.
Contact Customer Support: If the issue persists, contact your bank's customer support for assistance. Provide details of the failed transaction for quick resolution.
Cancel Pending Transactions: If the transaction is stuck in a pending state, check your transaction history and cancel any pending transactions to avoid duplicate payments.
Update UPI App: Ensure that your UPI app is updated to the latest version to fix any bugs or issues that could be causing the transaction failure.
Read More:: MDR Charges on Rupay Credit Card
The Unified Payment interface has brought about a great change in digital payments and transformed the mode of transaction in India. However, users may sometimes face failed transactions that debit money from their accounts. This creates a fear of losing money among users, so it's important to know what to do and what not to do in that situation. Acknowledging that situation can help us take the next step so that we can get a refund.
In case of failed transactions, it is important to stay patient, keep records of transactions, and know your rights under the RBI guidelines. Being proactive, checking balance, verifying recipient details, and having a stable internet connection can reduce transaction failures. Overall, staying informed and prepared will increase the UPI experience and ensure a secure and efficient transaction.
What should I do if my UPI transaction fails but the amount is debited from my account?
If your UPI transaction fails but the amount is debited, keep transaction records and be patient. Wait for two to three business days, and follow up with customer support if the amount is not refunded.
What are the common reasons for UPI transaction failures?
Common reasons include an unregistered bank account, an incorrect UPI PIN, exceeding the daily transaction limit, insufficient balance, or the wrong UPI ID.
How long does it take to refund for failed UPI transactions?
Refunds may take 3-5 business days to process. If the amount has not been credited to your account, contact your bank.
What is an RBI guideline for failed UPI transactions?
Failure of an IMPS, which is like a UPI transaction, where the customer account is debited but the beneficiary account is not credited, requires auto-reversal in T+1 day. If the bank does not credit the amount back to the customer's account by T+1 day, the bank is liable to pay a penalty of Rs 100 per day for the delay beyond T+1 day.
Download the app now
Download the app from PlayStore
