Since Yes Bank's own net banking services have been down post-issuance of moratorium by RBI capping withdrawals at ₹50,000 per account until April 3, the digital payment service provider PhonePe dependent on Yes Bank for processing its transactions could not operate as well.
Impact of moratorium on PhonePe operations
PhonePe used to use Yes Bank as its UPI partner, which means all platforms who used Yes Bank as their UPI partner will be affected as a consequence of the RBI move.
"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 (as soon as possible)", tweeted PhonePe's chief executive officer Sameer Nigam early this morning.
Rahul Chari, co-founder & CTO, PhonePe provided assurance to its customers tweeting, "All teams @PhonePe_working round the clock to get our services going. Wallet and cards enabled for purchase. Next stop is your favourite UPI service."
Updating users on the progress, Rahul Chari's recent tweet stated, "As a first step to recovery started disbursal of merchant settlements. Next step is to enable services for our users. Thank you for your continued patience."
PhonePe spokesperson assured us saying, "We will resume our services in a few hours. We will begin resuming wallet services for debit cards, credit cards, etc. shortly, and UPI-based payments by the end of the day with a new partner."
How will this move affect Fintechs?
Yes Bank's UPI handles have been shut down by the National Payments Corporation of India, which would affect operations of fintech startups processing digital payments significantly, at least for this month.
Other fintech operators who depend on Yes Bank to settle their transactions are also down. According to NPCI's website, the list includes companies such as Myntra, Jabong, Flipkart, PVR, Cleartrip, RedBus, MakeMyTrip and more. However, partners who have multiple tie-ups for payment processing and options for consumers like GPay will not be affected.
Consumer payments can still go through with startups such as Swiggy, Zomato, Flipkart and others, who have multiple payment partners and are not dependent on one. Those consumers with UPI accounts made using Yes Bank UPI handle should have stopped working by now.
The bank in question accounts for 39 per cent of all UPI transactions in the country. It will not be able to make any investment, grant any loan or advance, incur any liability or agree to disburse any payment post the moratorium.