Core Insights - India's subscription economy is shifting back to cards for recurring payments due to UPI's AutoPay feature experiencing failure rates as high as 90% [1][18] - The high failure rates are attributed to insufficient bank balances and incorrect beneficiary details, leading to involuntary cancellations and increased churn for startups reliant on recurring payments [2][18] Group 1: UPI AutoPay Performance - In August, UPI AutoPay transactions saw a failure rate of 55-90% across various banks, with State Bank of India processing 2.13 billion transactions but only achieving a 36.14% success rate [4][18] - Airtel Payments Bank had a particularly low approval rate of 10.49% for its 568.9 million UPI AutoPay transactions [4] - ICICI Bank reported the highest approval rate among large banks at approximately 52% [4] Group 2: Industry Response - Executives from software and video streaming companies are now focusing on debit and credit cards and netbanking for recurring payments due to UPI's reliability issues [3][18] - The high rejection rates are prompting businesses to reconsider their payment strategies, as a failure rate above 5% significantly impacts customer acquisition costs and revenue [11][18] - Some companies are allowing grace periods for subscription renewals, but this creates friction and may lead to users voluntarily canceling subscriptions [12] Group 3: User Behavior and Market Dynamics - User behavior, such as frequent switching of primary UPI apps, adds friction to the payment process, contributing to failures in recurring payments [8] - UPI AutoPay was launched in 2020 to facilitate recurring payments without cards, but its high failure rates are challenging its scalability for dependable subscription revenue [9][18] - Despite the challenges, UPI AutoPay transactions surged from 58 million to approximately 175 million in a year, indicating continued growth in digital adoption [15] Group 4: Market Segmentation - UPI remains the preferred choice in small towns and price-sensitive segments, particularly for subscriptions under ₹100, while credit and debit cards are viewed as more reliable for recurring payments [10][16] - Investment platforms tend to have a more stable subscription model compared to entertainment apps, which often struggle with user retention post-free trials [14][15] - The challenge lies in balancing the convenience of UPI with the reliability needed for subscription-based revenue models [17]