YES Bank – a leader in UPI transactions leaves payment companies like PhonePe high and dry

• The Reserve Bank of India capped the withdrawals from YES Bank at ₹50,000 and that has set a frenzy in motion in the banking sector.
• From digital payments companies, that have wallets, to the ones that offer financial services and were linked with YES Bank have now come in the eye of the storm.
• YES Bank accounted for 40% of UPI transactions in January 2020 – accounting for 514 million transactions.

India’s central bank – the Reserve Bank of India capped the withdrawals from YES Bank at ₹50,000. That has set a frenzy in motion across the banking sector. People hurried to transfer money in netbanking or from the app, but both services were down from Thursday night, queues began in front of YES Bank ATMs. And, even fintech companies in India took a hit.

From digital payments companies, that have wallets, to the ones that offer financial services were caught in the eye of the storm. According to the National Payments Corporation of India (NPCI), YES Bank was the UPI partner for about 20 apps. The bank accounted for 40% of UPI transactions in January 2020 – accounting for 514 million transactions.

PhonePe, the digital payments company’s servers went down late Thursday night, as it uses YES Bank as the backend for most of its UPI accounts.


PhonePe’s CEO Sameer Nigam too addressed the issue early in the morning and wrote on Twitter, “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. Thanks for your patience. Stay tuned for updates!.”

A few Twitter users called PhonePe a collateral damage to the YES Bank crisis.

Meanwhile, Zerodha which offers retail and institutional broking, currencies and commodities trading, mutual funds, and bonds, too addressed its customers’ concerns. Nitin Kamath, the founder and CEO of the company YES Bank customers to change their primary bank linked with their Zerodha accounts immediately.

“We have cancelled all fund withdrawal requests made by clients to their YES bank accounts so that the money doesn’t get blocked. Please change, if your primary bank account is YES, to any other and withdraw the funds,” he wrote on Twitter.

Payments processing platform Razorpay maintained that its payment gateway services are unaffected, yet didn’t rule that ‘some other services might be affected’.


See Also:
Yes Bank mobile and net banking down after RBI limits withdrawals to ₹50,000
India's largest bank stock sees the sharpest fall in over 7 years — investors want to say 'no' to Yes Bank