"Rate Limit Exceeded" errors occur when the bank receives too many requests from an application in a given time. The limit and time-range will vary for each bank.
This limit is across an entire application registered with the bank, rather than for a single PSU. An example limit would be 100 requests per minute, but as mentioned, this is not standardised across banks.
When a limit is reached, banks will typically automatically reject any further payments for a defined period. The requests are not put into a queue to be accepted at a later point. The PSU will need to generate a new request.
How to resolve the error?
Once the volume of PIS or AIS requests is reduced, the application will work as expected again.
Why do banks apply a rate limit?
It helps with the performance of their APIs, as the system will not get overloaded. Some banks may have physical limitations on data transference.
Banks will typically measure processing limits in Transactions Per Second (TPS).
You can read more about Rate Limiting here.