The Reserve bank of India's moratorium on the country's ailing YES Bank has had a ripple effect on third party fintechs who rely on the bank for payments processing through the country's Unified Payments Interface (UPI)
The Central Bank has temporarily frozen operation at YES Bank due to concerns over its capital position and placed a cap on withdrawals by customers of INR 50,000 till April 3.
The action has led to a cascading affect across the 20-or-so third party firms that YES Bank supports for QR Code payments and at the National Payments Corporation of India's UPI platform.
Payment firms PhonePe and BharatPe, through whom YES Bank had clocked a 40% market share for payments processed through UPI, were among the firms scrambling to uncover why payments transactions were suddenly failing. PhonePe, which is used by more than 175 million users and had an exclusive relationship with YES Bank, has been hardest hit.
PhonePe chief executive Sameer Nigam took to Twitter to apologise to customers for the declined transactions. Other third party fintechs facing difficulties include Entrackr, Cred, Udaan, Neo-bank, Cashfree, Razorpay, MakeMyTrip, Myntra, Ezetap and Swiggy, among others.
YES Bank's own Interrnet banking service has been down sine midnight on Thursday.