After the YES Bank fiasco, UPI-led payments platforms such as PhonePe and BharatPe were able to recover back quickly, thanks to the support provided by the National Payments Corporation of India and ICICI Bank.
With QR codes working again, and fewer problems in handling peer-to-peer (P2P) or peer-to-merchant (P2M) transactions, PhonePe and BharatPe are now back on track. But the whole episode has taught them a lesson — to have more than one partner banks for facilitating UPI transactions. This might be the reason why companies are now looking to partner with other banks as well and follow a multi-bank approach for UPI.
According to an ET report, while PhonePe is in talks with the State Bank of India (SBI), BharatPe is trying to partner with Kotak Mahindra Bank and SBI. The partnership with more than one bank will help these companies to prevent themselves from becoming inoperable. Speaking to Inc42, a PhonePe’s spokesperson said, “While we were actively working on adding other PSP partners, we cannot reveal more at this stage.”
ICICI, NPCI Come To Rescue
After RBI imposed a moratorium on YES Bank last week, NPCI blocked YES Bank’s UPI handles. The bank had two UPI handles — @ybl and @yesbank. As YES Bank was the partner for 20 of the 32 third-party players on the UPI network, this impacted several apps negatively, including PhonePe and BharatPe.
However, with ICICI’s help, UPI operations were working again on Friday. ICICI bank is now processing close to 60% of UPI transactions as it also working with other UPI players such as Google Pay.
BharatPe’s cofounder and CEO Ashneer Grover said that all the QR codes are again active. “It was one of the fastest migrations. NPCI was working with us overnight to get this done,” he added. Notably, BharatPe’s QR codes had around 20-30% exposure to YES Bank.
Such a situation has come for the first time for UPI players and fortunately, ICICI Bank was prepared for this. ICICI Bank said that its application programming interface (API) for UPI payments was already tested for high-volume transactions.
Further, executive director of ICICI Bank Anup Bagchi said that the bank put together a 40-strong team of legal, operations and technology to avoid having to obtain approvals sequentially.
Currently, users are still using YES Bank’s UPI handles. However, Bagchi said that if customers want, the handles would be revised to reflect ICICI Bank domain names.
Besides ICICI Bank, NPCI also played a key role in supporting PhonePe and BharatPe during the first 24 hours, including giving a no-objection certificate (NOC) to migrate UPI handles of YES Bank users to ICICI Bank till the moratorium is in place.
After the moratorium was announced, PhonePe was also unable to settle payments with merchants as most of the money is still stuck in YES Bank’s nodal account. This is expected to sort out after the moratorium is uplifted by RBI.