PhonePe is operated by Walmart-controlled e-commerce firm Flipkart
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Topline: Walmart’s Indian payment service has been dealt a blow after India’s central bank took control of troubled lender Yes Bank and froze transactions, leaving millions of users unable to make transactions.
- Casualties of the crisis include Walmart-owned PhonePe, India’s largest digital payments provider with 175 million customers.
- PhonePe uses Yes Bank to process payments, send and receive money and top up mobile phones and suffered prolonged outages on Friday alongside several payments services firms that also relied on the private bank.
- “We sincerely regret the long outage…Entire teams’ been working all night to get services back up as soon as possible,” PhonePe CEO Saneer Nigam tweeted on Friday. https://twitter.com/_sameernigam/status/1235735713166942208?s=20
- It comes after the Reserve Bank of India’s seized Yes Bank, India’s fourth largest lender, disrupting several businesses that rely on its infrastructure to process online payments and other services. The bank has struggled to raise $2 billion in capital to compensate for losses from bad loans.
- As a result, transactions and payments have been blocked for 30 days, while withdrawals are limited to 50,000 rupees a month ($675).
- Other key startups supported by Yes Bank—Microsoft’s Kaizala messaging app, ticketing firms Cleartrip, MakeMyTrip, and Flipkart-owned fashion platform Myntra have also been impacted.
Key background: Walmart outbid Amazon to acquire Indian e-commerce giant Flipkart, which owns PhonePe, in 2018 for $15 billion.
Tangent: Flipkart could be the subject of another antitrust probe in India, with the company accused of undercutting local brick and mortar retailers with steep discounts online. Amazon’s Indian arm has also faced similar criticism, but both companies deny the accusations. India’s competition commission ruled in 2018 that Flipkart and Amazon in India did not breach antitrust rules, Reuters reported.