Curbs on Yes Bank caused massive outages in the operations of leading UPI players
The National Payments Corporation of India (NPCI) has asked payment service providers on its popular payments platform UPI to adopt a multibank model in a bid to ensure “full resilience” of the country’s payments ecosystem, which was disrupted after regulatory curbs were imposed on Yes Bank late last week.
The curbs caused outages in the services of leading UPI players such as PhonePe and BharatPe, where the distressed lender was the sole banking partner.
NPCI, which acts as an umbrella organisation for retail payments and settlement systems in India, said on Tuesday that it had already first advised large UPI players to operate under a multi-bank approach in September 2017.
“There are already a few payment apps operating on the multibank model and some of them are in the final phases of migration,” according to the NPCI statement. “NPCI has been a proponent of the multibank model to ensure full resilience of the ecosystem. The last leg payment service providers also prefer to work with multiple parties to ensure high availability of payment systems.”
Furthermore, as per a circular issued on March 2 – three days prior to the Yes Bank action — NPCI had laid down guidelines for all large third-party application providers (TPAP) to participate in UPI only through a mandatory multibank model.
These guidelines applied on all large service providers processing more than 5% of total monthly value or volume on the UPI ecosystem with a minimum or at least three partner banks which could extend up to 10 banks. “NPCI shall reserve the right to mandate systemically large TPAPs to onboard on a multibank model, right from the beginning,” according to the said circular.
Experts have pegged the sole reliance on Yes Bank APIs by several third-party players to conduct their operations as the primary reason the fintech ecosystem collapsed following sudden imposition of moratorium on Yes Bank by the Reserve Bank of India on March 5.
These players include large UPI companies such as PhonePe and BharatPe along with ecommerce majors Flipkart, B2B commerce player Udaan, Angel Broking, and AePS leaders PayNearby. While most of the companies tied up with private lender ICICI Bank, some are now in talks with other banks to adopt a multi-bank support model in line with NPCI guidelines.
Walmart-backed PhonePe is said to be in talks with leading domestic banks to add new UPI handles onto their application.
“As we have already said in several forums recently, we were actively working on adding other PSP partners, this is also as per the recent NPCI advisory and we would have gone live with ICICI by April anyway,” a PhonePe spokesperson told ET.