After outages at PhonePe and BharatPe, ICICI Bank absorbs Yes Bank transactions

On March 5, 2020, the Reserve Bank of India (RBI) enforced a moratorium on Yes Bank. While the move was aimed to protect depositors and prevent erosion of capital of the bank, its payments and settlement systems stopped functioning as well.

When Yes Bank’s fintech and payment partners BharatPe and PhonePe began suffering outages because of the sudden takeover by the RBI, ICICI Bank stepped in to take over the payment and settlement systems that these two companies were using.

PhonePe users could not use the app to make transactions through the entire March 6, 2020. Even BharatPe, which deploys QR codes at small merchant outlets, stopped functioning. The private sector lender helped set up systems up and running within 36 hours, the online publication added.

ICICI Bank had to establish multiple features and services such as creating nodal accounts, reconciliation systems, processing capacities in the back end to be able to support transactions through these entities. Its officials worked very closely with the PhonePe team on and got up and running quickly.

Industry sources told Moneycontrol that PhonePe had been in discussions with ICICI Bank for months after the National Payments Corporation of India (NPCI) mandated a multiparty model for all UPI third party applications. UPI is a digital payment system developed by NPCI which enables customers to transfer funds between bank accounts through smartphones instantly.

However, even if BharatPe was processing some part of its daily volume through ICICI Bank, Yes Bank was still their major processor. Once Yes Bank moratorium is over, it will mean PhonePe users will have a choice of two handles from two different banks to work with.