The Reserve Bank of India has imposed a moratorium on YES Bank and seized control of the capital-starved bank. The operations of the bank have been restricted, withdrawals by account holders are capped at Rs 50,000 per account as the RBI puts a bailout plan in place. The RBI said in a statement that it has superseded the board of the private sector bank because of the serious deterioration in the financial position of the Bank. YES Bank in trouble isn’t only bad news for account holders. As it turns out, YES Bank was a dominant player in the Unified Payments Interface (UPI) space, at least till the situation changed late yesterday. What does this mean?
That is perhaps best summarised by PhonePe’s co-founder and CEO Sameer Nigam who in an early morning tweet today said, “Dear @PhonePe_customers. We sincerely regret the long outage. Our partner bank (Yes Bank) was placed under moratorium by RBI. Entire team's been working all night to get services back up asap. We hope to be live in a few hours.” It turns out that PhonePe isn’t the only payment platform that will have to migrate accounts and payment infrastructure. The numbers speak for themselves. YES Bank processed 514 million of the total 1.3 billion UPI transactions in January 2020. YES Bank lead the way, ahead of SBI, HDFC Bank, ICICI Bank and Axis Bank. The NPCI data also indicates that in January, YES Bank users initiated as many as 14891345 mobile transactions in the month amounting to a total of Rs 77673216.03 in value.
A cursory glance at the 3rd party apps list on the National Payments Corporation of India (NCPI) suggests that it is not just PhonePe which relies on YES Bank for allowing digital payments. The other popular platforms that will be impacted right now include Swiggy, Flipkart, Makemytrip, Airtel, Jabong, Myntra, PVR, Cleartrip, Redbus and Hungerbox. Only Google Pay and Truecaller Pay have multiple UPI partners in India. Google Pay is using UPI services with Axis Bank, HDFC Bank, ICICI Bank and State Bank of India. Truecaller Pay has ICICI Bank and Bank of Baroda signed on as partners for the UPI transactions.
If you are using any of these apps regularly for shopping, digital transactions or even to pay for bills, you may face issues with UPI as a payment method till these apps have other UPI partners in place. The new WhatsApp Pay service uses ICICI Bank for the UPI payments.