PhonePe stops all UPI-based payments on Flipkart website. Is India not ready with UPI based payment service yet?

Situations after demonetisation aren’t very comfortable as the government pushes for digital economy, but the instruments to implement doesnt. While there have been countless instances earlier, the PhonePe-ICICI Bank issue is now approaching a dead end with the payment app stopping all UPI-based payments on Flipkart website.

What exactly happened?
If the ICICI Bank is to be believed, Phone Pe was following restrictive practice in UPI payments by only allowing the users of its own UPI handle to do transactions. ICICI Bank cried foul and demanded Phone Pe to ensure interoperability, wherein users enjoy the freedom to choose any UPI handle to make payments.

The Phone Pe has requested National Payments Corporation of India (NPCI), the developer of the Unified Payments Interface (UPI), to allow interoperability.

What’s the situation now?
“We have made multiple requests to NPCI (National Payments Corporation of India) to resolve the matter quickly. Unfortunately ICICI has refused to unblock UPI access—even after NPCI issued a public directive telling them to do so on Thursday. Then, without explanation, NPCI reversed it’s own directive via a press release on Friday night, but yet again failed to highlight exactly which interoperability guidelines they believe PhonePe is in violation off,” PhonePe said in a statement.

“Under the current circumstances we believe it’s unfair to subject our own merchants, including Flipkart, to such poor service quality. We requested Flipkart to allow us to temporarily suspend UPI-based payments on the Flipkart app until this issue is properly resolved,” PhonePe added.

Last Thusrday, NPCI had a tripartite discussion among ICICI Bank, Yes Bank and Phone Pe. ICICI Bank was asked to open up all UPI transactions immediately.

However a day back, NPCI did a U-turn and said that Flipkart’s e-wallet had violated interoperability norms.

ICICI Bank has further confirmed that once Phone Pe allows interoperability, UPI transactions for the app will be opened.