Yes Banking crisis: UPI use 40% dives, PhonePe lines are cut
On Friday night, a spokesman for Phone-Pe told TOI that UPI transactions between peers had returned. A source said that the RBI and the National Payments Corporation of India (NPCI) have allowed PhonePe to switch to ICICI Bank even when it allows users to retain Yes Bank’s UPI IDs after migration. This was crucial as current standards require customer consent before changing the UPI identifier. PhonePe will end the migration for commercial payments in the coming days.
In January, Yes Bank processed 39% of the 1.3 billion UPI transactions in the country. This was because PhonePe recorded around 570 million transactions, and most came from UPI. Other technology platforms that used Yes Bank, such as the Swiggy food delivery application and B2B commerce player Udaan, also saw failures on Friday in their UPI payment option.
The FlipPart and MakeMyTrip group platforms of PhonePe have partnerships with Yes Bank for UPI payments, which were affected. PhonePe, which until now only relied on Yes Bank to provide UPI identities to customers, was forced to speed up conversations with ICICI Bank to use its services. There is no indication when services will be restored.
The interruption of PhonePe also divided the fintech industry, with Paytm participating in guerrilla marketing, sending messages to customers saying: ‘Does the payment application not work? Switch to Paytm. “This was followed by Paytm and PhonePe exchanging heated messages on Twitter.
The founder of Paytm, Vijay Shekhar Sharma, said that this (the unavailability of Phone-Pe) is a lesson and a reminder that the NPCI should not allow such applications to depend solely on a bank. “This is a lesson and a reminder that NPCI should only allow payment service providers to issue identifiers on behalf of several banks, not just one. Nor should it allow more than 33% market share for any single payment application. This is an example of how excessive dependence among a few players can send things to a dive, ”he said.
While Paytm owns a bank, Google Pay, another third-party UPI application, works with four banks to issue UPI identifiers.
BharatPe, which allows merchants to receive payment for any UPI application, has put a fleet team on land to replace QR codes with those issued by the ICICI Bank. While PhonePe has 10 million merchants, BharatPe has 4 million. The founder and CEO of BharatPe, Ashneer Grover, said that approximately 20% of their QR codes are from Yes Bank and the rest have moved to ICICI Bank in the last six months. “We have sent our team to merchant locations to replace existing Yes Bank QR codes,” he added.