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This PhonePe-ICICI Bank standoff just doesn’t end. A little game…

So, let’s play a game. It’s called read between the lines. Earlier this week, ICICI Bank blocked UPI payments from PhonePe, a Flipkart-owned YES Bank application; PhonePe said that more than 20,000 transactions with total value of over Rs 5 crore failed because of ICICI Bank’s move.

In continuation of the interconnection drama, yesterday, MediaNama received statements from YES Bank, PhonePe/Flipkart, ICICI Bank and the National Payments Corporation of India, the private, bank-owned body which runs UPI. So the object of the game is to figure out what exactly has been happening behind the scenes here, between these four, because we really cant figure what is going. Leave a comment. Tell us what you think.

Let’s start with YES Bank then which sent in a statement at 11:20 am.

Mumbai, January 19, 2017 : There were concerns raised by a UPI member bank in the media recently over the security of the application and customer data confidentiality with regards to our partner Phonepe, offering UPI services.

YES BANK has not received any such query or information from NPCI.

YES BANK would like to confirm that:
1. The PhonePe application has complied with all the prerequisites as mandated by the network association.
2. The process laid out by NPCI involves detailed certification, vulnerability assessment, penetration testing, application security, 3rd partly security audits and a host of other procedural guidelines, all of which have been complied with.
3. In fact, all member banks who are offering the UPI services have undergone exactly the same process and were allowed to go live only after complying with the same process. This service has been live since August 2016.

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YES BANK is a firm supporter of NPCI’s UPI platform and believes that interoperability by all member banks will ensure that the full benefits of UPI can be availed by all the customers. This will further accelerate the journey to a “less-cash” economy.

MediaNama had asked YES Bank what steps it is taking to address alleged interoperabilty issues on the PhonePe app. Note that it is alleged that PhonePe violated the merchant guidelines (read this), and when it launched with Flipkart, it didn’t follow due process. More details in our story.

Next up, we have a statement which was put on the NPCI’s website around in the afternoon:

NPCI’s statement pertaining to ICICI Bank blocking PhonePe’s UPI transactions

Mumbai: Based on a review by National Payments Corporation of India (NPCI) on ICICI Banks’s action to block Unified Payments Interface (UPI) transactions made through PhonePe App, we would like to state that ICICI Bank has been advised to open UPI transactions immediately.

We had a discussion with ICICI Bank and YES Bank – the banker to PhonePe to review the matter and arrived at this.

We have also advised banks including YES Bank to adhere to the merchant on-boarding guidelines meticulously from the angle of interoperability of merchant App so that such disputes are avoided.

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Note that the key word in this press release is the ICICI Bank was “advised to open UPI transactions immediately”. Advised and not ordered to. So the NPCI is powerless?

And that makes Flipkart happy, because they think they’ve WON! Here’s a statement from Sameer Nigam CEO and founder of PhonePe which was sent in at 7:56 pm.

“We have read the recent NPCI release, and feel vindicated that they have stood by us. We are glad to see this issue behind us and look forward to ICICI bank unblocking transactions for PhonePe customers with immediate effect.

To iterate, we have not made any changes since we were cut off by ICICI Bank. We have always been compliant with the UPI guidelines and will continue to do so as the standards evolve. This includes implementing the new set of guidelines for which NPCI has set a deadline of Jan 31st for all UPI enabled apps, including PhonePe to adhere to. We are welcoming all our loyal ICICI customers back.”

WAITAMINNIT! ICICI Bank isn’t done yet

So, can customers link ICICI Bank accounts to a YES Bank handle? No, they can’t. We checked.

ICICI Bank sent a statement at 9.12 pm which emphatically said that it would not allow linking of bank accounts till interoperability norms are complied with.

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Statement of ICICI Bank on PhonePe case

An ICICI Bank spokesperson 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.

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.

MediaNama checked if ICICI Bank is still allowing payments from PhonePe and they were still blocked last night:


So what is going on here?

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MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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