Given that bank-agnostic apps are contributors to UPI's success, but ambiguity on operational issues can hamper
Caught between a highly-publicised dispute between ICICI Bank and Flipkart’s UPI App PhonePe over allowing payments through the latter, National Payments Corporation of India (NPCI) has changed its stand within a span of two days, bringing into focus the lack of clarity on interoperability issues.
On January 19, the digital payment infrastructure agency issued a statement that seemed to favour the stance of PhonePe, which is supported by private sector lender YES Bank, over ICICI Bank. The latter’s view was that PhonePe was following a restrictive practice of allowing only users of its own UPI handle to make payments on its App, violating UPI guidelines that mandate interoperability, letting users choose any UPI handle to make payments. “Based on a review on ICICI Bank’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,” NPCI had stated, adding that it had arrived at this decision after a discussion with ICICI Bank and YES Bank.
However, NPCI did a volte face on January 21, asking PhonePe to comply with UPI guidelines and allow payments from UPI handles of all banks on their apps. “NPCI has noted that PhonePe and Flipkart Apps are in contravention of the UPI guidelines of interoperability,” the second statement declared, ‘requesting’ ICICI Bank to allow UPI transactions from PhonePe App as soon as compliance requirements are adhered to.
It is not clear what prompted the NPCI to reverse its earlier decision within a gap of mere two days. While it had advised YES Bank to adhere to merchant on-boarding guidelines in the context of interoperability to avoid such disputes on January 19, the fact remains that the corporation had ruled against ICICI Bank in the first instance.
Such contradictory positions can potentially be lethal for a budding electronic payment ecosystem in the country, where digital sceptics abound and more importantly, tech-savvy individuals, are taking baby steps towards embracing the new-age way of transacting. NPCI needs to come up with an unambiguous policy to deal with such disputes to prevent digital users from moving to other forms of electronic payments or worse, cash.