ICICI Blocks PhonePe as India Payment Market Battle Intensifiesby
ICICI Bank Ltd. blocked transactions on payments app PhonePe, a move that the digital wallet’s chief executive officer said will hinder India’s adoption of a national payment interface.
Blocking ICICI customers from making any transactions on the digital wallet came with “no intimation” and “no provocation,” PhonePe CEO Sameer Nigam said in a tweet on Saturday.
PhonePe offers payments on the Unified Payment Interface, a national system designed to make transferring and receiving money as easy as exchanging e-mail or text messages, through a tie-up with Yes Bank Ltd., one of the UPI’s partner banks. Usage of the mobile platform has surged in recent weeks since the government’s ban on high-value rupee notes took about four-fifths of India’s currency out of circulation.
The country’s big banks are now vying with digital wallets offered by startups to garner a larger slice of a payments business that Bank of America Corp. projects could grow to $3 trillion within six years. ICICI is the second bank to block a payments app this year, following State Bank of India, which stopped its customers from adding money to Paytm’s digital wallet, citing security concerns.
“Some banks including us have raised security-related concerns at appropriate forums about the access to UPI data to a non-banking application,” an ICICI Bank spokesman said in a text message.
PhonePe is following restrictive practices allowing users to make payments only with their UPI handles, “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,” the spokesman said. The transactions are temporarily blocked until these concerns are resolved, he said.
Nigam didn’t immediately respond to an e-mail seeking comments on the concerns raised by ICICI, India’s second-largest private sector lender by assets.
“Unilateral actions” such as ICICI’s will be an obstacle to the UPI, the PhonePe CEO said on his Twitter account on Saturday. The operators of the UPI platform should ask ICICI “what’s going on here,” he said.