“Post the RBI moratorium on withdrawal of money from Yes Bank, Paytm Payments Bank has taken this step to ensure that its users’ money doesn’t get stuck in their Yes Bank accounts…,” the payments bank said in a statement.
With Yes Bank being put into moratorium by the Reserve Bank of India, a number of digital platforms that were dependent on Yes Bank’s payment service gateways faced outages.
According to the National Payments Corporation of India, 14 of 31 third-party merchants offering UPI as a payment option exclusively use Yes Bank’s gateway. The most significant disruption was faced by Flipkart-owned payment app PhonePe, which was down throughout the day on Friday. However, its functionalities were restored partially by evening.
Notably, Yes Bank has been among the leading banks handling transactions on the unified payments interface (UPI). In its annual report for 2018-19 (April-March), Yes Bank noted: “The Bank has consistently been ranked as First since inception for processing UPI based Merchant transactions (market share in merchant payments as on March 19 is 35 per cent) and second in terms of overall Payment Service Provider volumes across the UPI ecosystem in FY 2018-19 (overall market share as on March 19 is 31 per cent). The total number of UPI users for Yes Bank crossed 27.57 crore and the Bank processed around 143 crore transactions amounting to approximately Rs 2.35 lakh crore in FY 2018-19”.
Yes Bank was put under moratorium late Thursday evening, with several ceilings, including letting depositors withdraw only Rs 50,000 per account, in addition to and a slew of others including not taking fresh liabilities. This resulted in the bank being unable to render the services as a payment service provider.
In a tweet Friday morning, PhonePe’s CEO Sameer Nigam said: “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”. When asked by a Twitter user about lack of redundancies built in to the company’s systems, Nigam pointed out that multiple redundancies existed. “Just never imagined the bank itself going totally dark like this. Lesson learnt in the hardest possible way,” he added.
Other than PhonePe, other major merchants using Yes Bank’s UPI platform include Flipkart, Myntra, Cleartrip, Angel Broking, Hungerbox, among others.
In a statement, e-commerce firm Myntra said, “Transactions on Myntra have not been impacted, except for payments through PhonePe. Our customers can continue to transact on Myntra using other UPI payment service provider apps in addition to credit and debit cards and net banking until services of PhonePe are restored.”
In addition to those platforms directly affected by Yes Bank’s plight, some payments companies blocked payouts to Yes Bank accounts to prevent the funds of their customers and merchants from getting blocked. Paytm Payments Bank said it was restricting transaction settlements, including UPI, into Yes Bank accounts to safeguard its users’ money. “Post the RBI moratorium on withdrawal of money from Yes Bank, Paytm Payments Bank has taken this step to ensure that its users’ money doesn’t get stuck in their Yes Bank accounts where they are unable to move their money out,” the payments bank said in a statement.
Similarly, founder of financial-technology firm Instamojo Sampad Swain took to Twitter to announce: “We will be temporarily withholding payouts to your Yes Bank account until further clarity. This is to ensure your funds don’t get blocked. You can change your registered bank in Payout Settings from Yes Bank to another account…”.
Payment gateway firm Razorpay said while its core business remained unaffected due to the Yes Bank moratorium, there were minor disruptions in the auxiliary services, forcing the company to work with other banks for business continuity.