When a digital payment fails after the payer's account has been debited, the money stays with the payment system until it is reversed. Indian rules allow that reversal to take until the day after the transaction for a UPI transfer, and until the fifth day after it for a debit card payment at a shop or online, an ATM withdrawal or a UPI payment to a merchant. The payer is owed ₹100 a day only once that window has closed; for the days inside it the rules require neither interest nor a reversal dated back to the debit.
This paper traces where the money sits while it is held, from the regulator's directions and a bank's model escrow agreement, and prices the float from official volumes for 2025-26. The channels on the five-day window carried ₹124.1 lakh crore, debit cards ₹33.02 lakh crore of it. Each basis point of value that fails after the debit keeps ₹23.1 crore of payers' money in the system at any moment, worth ₹1.27 crore a year at the policy repo rate. If 1 per cent of payment value failed after the debit and every failure were held to the last permitted day, the float would be worth ₹127 crore a year.
The sum is small in aggregate and large for the individual: the average ATM withdrawal is 99.2 per cent of the average Jan Dhan balance. Set beside value dating in the EU, the US rules for electronic transfer errors and cheque holds, SEBI's blocked-amount process and the Supreme Court's terms for airline credit shells, the Indian rule is alone in pricing held money at zero.
The paper proposes value-dated reversal, interest from the day of the debit, a one-day window for cards, and the publication of statistics on payments that fail after the debit.