Read a good article about UPI from here long while back: https://blog.setu.co/articles/upi-103-the-settlement

The above is the explanation to inter-bank settlement processes. This is a 3-part article and links to the other parts are available therein. It gives a nice overview of UPI as implemented by NCPI in India.

My question is what constitutes a settlement failure? How does this affect customers and banks?

In my personal experience, sometimes payments can take up to 3 days to succeed. Is it anything to do with inter-bank settlements?

Or is it that the sheer volume of such incomplete or delayed payments actually constitutes inter-bank settlement failures?

RBI also has introduced CDBC to address the problem of settlements. But I'd like to understand settlements is a problem first, before I understand how CDBC will help with settlements.