Sunday, March 26, 2023
HomeEconomyYes Bank meltdown takes out PhonePe payments app

Yes Bank meltdown takes out PhonePe payments app

PhonePe, India’s leading digital payments provider with more than 175 million users, is the largest of a plethora of local start-ups that relied on Yes Bank.

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Bangalore: Walmart Inc.’s Indian payments service went down late Thursday after India’s central bank seized control of Yes Bank and froze transactions with the troubled domestic lender.

PhonePe Pvt Ltd, India’s leading digital payments provider with more than 175 million users, is the largest of a plethora of local startups that relied on the bank to process transactions. Leading business-to-business software platform Udaan asked buyers and sellers on its platform to refrain from using the Udaan Pay QR code, powered by Yes Bank.

Others that depended on Yes Bank included Microsoft’s Kaizala mobile chat app and online travel providers MakeMyTrip and Cleartrip, according to the website of the country’s official online payments infrastructure operator. Microsoft did not immediately respond to an email seeking comment, nor did MakeMyTrip. All succumbed Thursday evening, when the Reserve Bank of India took control of Yes Bank to stem a threat to the nation’s banking system.

“We sincerely regret the long outage,” Sameer Nigam, PhonePe’s founder and chief executive officer, said on Twitter Friday. “Our partner bank Yes Bank was placed under moratorium by RBI. Entire team’s been working all night to get services back up as soon as possible.”

On Thursday, India’s central bank suspended all transactions involving the capital-starved bank and limited withdrawals to 50,000 rupees for the next 30 days. Yes Bank has been a top provider of fintech infrastructure for Indian startups who incorporated its code to offer online payment services. Many use the lender’s software interface to integrate with the country’s digital payments backbone, known as the Unified Payments Interface.

Also read: RBI waited too long to take control of Yes Bank

Among the worst-affected was Bangalore-headquartered PhonePe, India’s fast-growing digital payments platforms. Users employ the app to send and receive money, pay for mobile recharges and utilities and even buy gold. About 8.7 million merchants across the country are on the PhonePe platform, including large online travel services such as redBus, India’s state-owned railway booking platform IRCTC, and ride-hailing startup Ola.

“We were integrated with Yes Bank’s digital infrastructure for our QR Code payments,” Udaan founder Amod Malviya, cofounder of business-to-business platform Udaan said in a phone chat. The Bangalore-based unicorn, which relied on Yes Bank, advised buyers and sellers on its platform not to make any deposits into its accounts, and asked sellers using Yes Bank to provide an alternative bank account on its app. “We have temporarily paused settlements to Yes Bank accounts,” Udaan said on Twitter.- Bloomberg

Also read: Seizing Yes Bank could lead to a contagion, analysts say


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