Now, Airtel Too Stops PhonePe Transactions; After Defying NPCI Directives, ICICI Bank Justifies Their Action


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Flipkart backed PhonePe is right now undergoing their biggest crisis, which is threatening their very existence. After India’s largest private sector bank ICICI stopped processing PhonePe transactions, it’s the turn of India’s largest telecom operator Airtel to block PhonePe.

In fact, as per some reports, it has been over 4 months since Airtel customers haven’t been able to recharge their mobile using PhonePe app. This means, over 50-60% of PhonePe user base is now unable to either use ICICI Bank for uploading money into their semi-wallet, or recharge/pay bill of their Airtel connection.

Another set of reports claim that not only ICICI Bank, but customers of other banks such as State Bank of India, Kotak Mahindra and Bank of Baroda are also not able to use PhonePe for any transactions.

On one hand SBI has clarified that they are now allowing usage of any wallet: PayTM, Freecharge, Citrus Pay , Mobikwik due to ‘security reasons’; on the other hand, PhonePe has clarified that customers of Kotak Mahindra and Bank of Baroda can now use their app for uploading money.

Security Risk of Using PhonePe?

As per official communication received by Airtel, it seems that some unknown ‘security issue’ is stopping them from allowing PhonePe for their users.

An official said, “We are concerned about security risks for our customers using e-wallets. When there is a transaction failure during phone bill payment (with a bank), there is a streamlined redressal mechanism, customer care service, 247 call centre and immediate reversal of paid amounts. But with wallets that is not the case. We are finding it difficult to deal with wallets and might have to re-think our digital strategy..”

Meanwhile, PhonePe is still trying to understand what exactly is the security risk.

PhonePe CEO Sameer Nigam said, ” Airtel has communicated to us that they are re-thinking their digital distribution network. We have expressed our concerns to them.”

ICICI Justifies Their Action of Defying NPCI Order

After ICICI Bank blocked their users from accessing PhonePe app, NPCI (National Payment Council of India) which manages UPI (Unified Payment Interface) protocol for digital transactions had ordered ICICI Bank to immediately allow PhonePe access to their customers.

However, ICICI defied their orders, and they continued the blockage of PhonePe.

Justifying this action, ICICI Bank issued a statement, wherein they have said that first PhonePe should adhere to the rules of interoperability by allowing users of any bank to use their own UPI ID to make payments via PhonePe. It seems that PhonePe is right now forcing users to use only PhonePe’s UPI id for making/receiving payments.

ICICI Bank’s statement said: “A certain non-banking application is following a restrictive practice of allowing only users of its own UPI handle to make payments on its App. This is a clear violation of UPI guidelines which mandate interoperability, wherein users enjoy the freedom to choose any UPI handle to make payments.”

ICICI Bank has assured that they will resume PhonePe’s access as soon as this is corrected by that non-banking application (most probably PhonePe), as they said: “NPCI has assured us in writing that this will get corrected very soon and the concerned App will allow interoperability. As soon as this is corrected, ICICI Bank will start allowing UPI transactions to resume on this App.”

This current embargo on UPI based transactions is certainly not helping the cause of digital economy. It seems that the very purpose of UPI: to allow users of any bank to make/receive payments from any bank is being violated here. It is still not clear here, who is the victim here, and who is the hunter.

We will keep you updated as more details come in..

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