Even as Yes Bank’s customers are chafing at the RBI having restricted withdrawals up to Rs. 50,000, the effect is spreading across the rest of the banking ecosystem.
PhonePe and several other payments apps, which had Yes Bank as their banking partner, are suffering long outages as Yes Bank goes through its crisis. At around midnight last night, PhonePe’s official Twitter account said that they were “temporarily unavailable.” “We are temporarily unavailable. We are going through an unscheduled maintenance activity. We apologize for any inconvenience this may cause. We’ll be back soon,” PhonePe tweeted.
We are temporarily unavailable.
We are going through an unscheduled maintenance activity. We apologize for any inconvenience this may cause.
We’ll be back soon.
— PhonePe (@PhonePe_) March 5, 2020
Soon after, users started reporting how PhonePe’s app had stopped working. PhonePe is one of India’s largest UPI apps, and there are now more transactions that happen through UPI than through debit and credit cards, and lots of people were impacted.
— Sukhdeep Singh?? (@ItsMeSukhdeep) March 5, 2020
— shubham goldar (@shubham_goldar) March 6, 2020
PhonePe CEO Sameer Nigam took to Twitter today morning to give more details around the outage. “Dear PhonePe customers. 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. We hope to be live in a few hours. Thanks for your patience. Stay tuned for updates!” he tweeted. He also said that they hadn’t anticipated such a situation would occur. “Multiple levels of redundancy exist (in our systems). Just never imagined the bank itself going totally dark like this. Lesson learnt in the hardest possible way. But we’ll come out stronger and more robust. That’s a promise to you and all our customers!!!,” he added.
Dear @PhonePe_ customers. 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. We hope to be live in a few hours. Thanks for your patience. Stay tuned for updates!
— Sameer.Nigam (@_sameernigam) March 6, 2020
It wasn’t only PhonePe that was impacted. Brokerages including Zerodha, HDFC Mutual Fund, and 5Paisa said that they’d be unable to make transfers to Yes Bank customers, and asked customers to change their primary banks.
We have cancelled all fund withdrawal requests made by clients to their YES bank accounts so that the money doesn’t get blocked. Please change, if your primary bank account is YES, to any other and withdraw the funds. https://t.co/p85cBc1SeZ
— Nithin Kamath (@Nithin0dha) March 5, 2020
If clients want to change their Redemption bank account mandate from Yes Bank to any other bank they can send a request to [email protected]. We shall process the request for tomorrow's redemptions so that their money isn't blocked.
— Nilesh Shah (@NileshShah68) March 5, 2020
Alert : Yes bank placed under moratorium by RBI Bank. Hence 5paisa would not be accepting any NEFT/IMPS service of Yes Bank. Customers can transfer funds using NetBanking or UPI id.
To add funds refer: https://t.co/7ODCZ2LTiu
To modify bank refer: https://t.co/G5WitKA1Th
— 5paisa (@5paisa) March 5, 2020
But even as PhonePe and other apps suffered outages, some in the Indian startup community urged the industry to help each other out. “It’s a defining moment for India Fintech,” wrote Nikhil Kumar, who was a part of the team that developed the Indian government’s BHIM app. “How we behave now – pull each other up or down will truly show who we we are as a community. I request all founders to restrain from any kind of guerilla marketing at this point!”
It's a defining moment for India Fintech. How we behave now – pull each other up or down will truly show who we we are as a community. I request all founders to restrain from any kind of guerilla marketing at this point!
— Nikhil Kumar (@nikhilkumarks) March 6, 2020
Mobikwik’s Bipin Preet Singh said his company would extend their support to those impacted. “At this time of systemic failure in UPI ecosystem, we at Mobikwik extend our full support to our friends and others who are impacted by Yes bank mess. We are here to help and hope there is a quick resolution,” he said, and was thanked by PhonePe CEO Sameer Nigam.
Thanks @BipinSingh. Truly appreciate the support. ?
— Sameer.Nigam (@_sameernigam) March 6, 2020
It’s a truly unique situation for India’s fintech space to be in, and it will likely test the robustness of the newly-created UPI platform. Over the last few years, UPI has emerged as India’s most popular payments platform, zooming past debit cards and credit cards. But its popularity has also meant that risks are now spread out more than before — only Yes Bank is impacted by the current crisis, but PhonePe, which was used by customers all banks, has also suffered an extended outage. UPI is currently staring at what is probably is biggest challenge yet, and how it faces up against it could well help determine its path in the years to come.