ICICI Bank blocks Transactions Through Flipkart Wallet PhonePe

These moves are seen as banks getting nervous of being disrupted by new-age digital payments players

ICICI Bank has blocked transactions on Flipkart-owned digital payments app PhonePe, accusing it of indulging in restrictive practices and breaking the Unified Payment Interface (UPI) guidelines of interoperability.

The bank began blocking transactions on PhonePe starting Friday, with Flipkart Online CEO Sameer Nigam taking to Twitter to protest the move. He claimed that the bank hadn’t provided the company with any prior warning or information, saying the move was “on purpose”.

Nigam said, “PhonePe has not received any official notice in this regards from NPCI or its banking partner YES Bank yet. Since Friday afternoon, ICICI Bank has blocked all their customers from using PhonePe, and even blocked any other bank’s customers from sending money to ICICI Bank’s customers using PhonePe.”

ICICI Bank stated: “This entity (PhonePe) is following restrictive practices allowing users to make payments with only its UPI handle, which is in contravention to the UPI guidelines of interoperability and choice that empowers a customer to choose any app to make payments through UPI.” 

This is the second instance of mainstream banks blocking services to new-age digital payments companies. Previously, State Bank of India stopped allowing users from topping up their Paytm wallets using the internet banking feature. The bank claimed it did so because of security concerns.

“And what about blockage for other universal interface called net banking?” Paytm founder Vijay Shekhar Sharma responded to Nigam’s plea on Twitter.

These moves are being seen as traditional banks getting nervous of being disrupted by new-age digital payments players. After the government’s demonetisation scheme, players such as Paytm, Freecharge and PhonePe have been racking up millions of transactions and roping in hoards of new users due to the convenience they offer.

Airtel and Paytm have started their payments bank services, offering customers the same convenience of using a wallet with some benefits of traditional banks, too. Airtel, for instance, will offer users 7.5 per cent interest per annum on money they park in their payments bank/wallet accounts.

While the government is backing BHIM, a UPI app built by the National Payments Corporation of India, people expect the move to only fuel the adoption of other digital payment apps as users begin to look for more options to transact. “We’re a full feature app in the sense that you can do recharges, bill payments or pay directly to a mobile number, whereas they (BHIM) are base vanilla,” Nigam said in a recent telephonic interview with Business Standard.

 

Reference - http://www.business-standard.com/article/companies/icici-bank-blocks-transactions-through-flipkart-wallet-phonepe-117011500600_1.html