With the emergence of mobile wallets which will soon double-up as your personal, paperless bank, India is witnessing a unique ‘War of Wallets’ as traditional banks are becoming increasingly afraid of the new-age digital economy.
If last month’s fiasco between SBI and Paytm was the spark of this war, the recent incident of ICICI Bank and Flipkart’s PhonePe has ignited the fight into a full blown war.
Who will have the last laugh here – Traditional banking practices or disruptive ideas?
ICICI Bank Blocks PhonePe’s Transactions
Since Friday (January 13th, 2017), ICICI Bank has blocked all transactions done on PhonePe’s platform. And the reason being given is that PhonePe is breaking Unified Payment Interface (UPI) guidelines of interoperability, and indulging in restricting practices.
PhonePe is owned by Flipkart and is considered as one of the rising stars within the niche mobile wallets industry in India.
Flipkart Online CEO Sameer Nigam protested this move, as he 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.”
In their reply, ICICI Bank said in a statement: “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.”
ICICI Bank had recently created UPI-based IDs of all their customers.
As per reports, around 6000-8000 transactions on PhonePe has been blocked by ICICI Bank since Friday.
Banks Are Afraid Of Mobile Wallets?
Last month, it was reported that India’s largest bank: SBI had blocked their users from transferring money into their Paytm wallet using SBI Bank account. In turn, SBI skillfully encouraged their customers to use their own wallet: SBI Buddy, instead of Paytm.
And now, India’s largest private sector bank ICICI Bank has blocked PhonePe’s transactions.
This simply means that both of India’s largest banks are right now scared of private digital wallets, and they are now adopting to practices of protectionism to save their market share.
There are basically two problems with this practice: Usage of UPI-based transactions will suffer, and it would divide the users into the smaller camps, thereby affecting adoption of digital transactions on a whole. If an SBI user having Paytm wallet is not able to transfer money, then either he will start using SBI Buddy or ditch cashless transactions altogether.
We will keep you updated on the War of Wallets, as more details come in..
