Saturday, February 4, 2023

SBI Orders Payment Gateways To Block UPI Services For Crypto Trades

An Indian multinational public sector bank, State Bank of India, has announced that its UPI platform will not accept funds by crypto bourses. 

A circular has been released by the country’s largest lender asking the payment processors to stop providing the SBI UPI services to the crypto merchants, according to the sources. 

With this, traders would not be able to buy any of the cryptocurrencies through UPI transactions, as none of the processors will receive the funds. 

UPI is a Unified Payment Interface that helps bank account holders to process transactions from their smartphones. For doing so, the user does not require the bank account information or net-banking user id and password.

As per the report, in the past six months, several banks restricted the fund transfers related to crypto trades. Now, the SBI has also decided to stop offering its UPI service to the crypto exchanges in India. 

While talking about SBI’s recent decision, its spokesperson has said, “It is the policy of the bank not to comment upon matters relating to the subject matter.”

Soon after the announcement, India’s largest crypto bourse, WazirX, got affected by it, as the payment processor stopped its services following SBI’s decision.

Industry circles believe that if the SBI rethinks about its decision then the payment processor would start accepting the funds, otherwise, they will continue this and other exchanges might also get affected by this.

Nischal Shetty, the CEO of WazirX, shared his concern on this issue and said, “We’re trying to discuss and put forward our points to SBI. WazirX follows KYC (know your customer) norms and AML (anti-money laundering) policies. Being the largest crypto exchange in India, millions of Indians are currently affected due to this move by SBI.”

Shetty added that he and his company has been hoping to get some positive resolution soon, on the matter.

After the payment processors blocked the UPI transaction, many traders on WazirX started using one of the e-wallet services for processing the transaction. 

However, the traders first preference in the absence of credit and debit cards, NEFT and net banking transactions was the UPI. 

Presently, while processing the transaction through an e-wallet, the traders had to pay transaction fees to it, also the fund transfer is limited.

After SBI’s decision, many banks may be afraid to onboard crypto merchants on their respective UPI platforms. 

Currently, the RBI has not stated anything specific regarding the SBI’s decision, but several banks and payment gateway have sensed the unstated regulatory stance over crypto.

As per the senior bankers, the RBI officials have voiced their reservations on cryptos.

Apparently, the National Payments Corporation of India (NPCI), a domestic umbrella body that developed UPI, has denied following the SBI’s decision and stated to continue the fund movements for crypto trades. 

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