India’s State Bank of India (SBI) has disabled its UPI payment facility for crypto-merchants. This is big news, especially since this is sure to impede access to the sector, something that has for long been a barrier to entry for many.
SBI UPI should be disabled for crypto firms by payment processors
National Payments Corporation of India (NPCI) developed the Unified Payments Interface (UPI) to facilitate interbank transactions through mobile phones. The UPI payment system is regulated and supervised by India’s central bank, the Reserve Bank of India (RBI). It enables seamless mobile trades for investors without the hassle of re-entering bank account information. Therefore, the exact reasons for blocking UPI payments are currently not clear. This means SBI bank customers cannot transfer funds via UPI to crypto exchanges to buy cryptocurrencies, including bitcoin. An SBI spokesperson was quoted as saying: “It is the policy of the bank not to comment upon matters relating to the subject matter.”
Fund transfers to crypto exchanges have been curtailed by several Indian banks. According to the NPCI, however, UPI payments to crypto companies will not be blocked. In its place, it advised banks to decide whether to allow cryptocurrency transactions based on their own risk assessments. As a result of SBI’s decision, many other banks may be reluctant to add crypto merchants to their respective UPI platforms, the publication stated.
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Indian crypto-exchange WazirX was still offering UPI payments, but only through a wallet app with no tie-ups to commercial banks. While 14 banks visibly support net banking instant deposits, such a list now does not include names like SBI, HDFC Bank, ICICI Bank, etc.
WazirX Owner/CEO and Co-founder Nischal Shetty told the publication: “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.”
Having to sign up for third-party wallet services is a setback for merchants. Moreover, wallets might impose a daily fund transfer limit and additional portal fees. The aforementioned development comes within days of banks reportedly softening their position on the trade of digital cryptocurrencies.