Banks rule UPI rails; Bizongo under scanner

Time of India

3 days ago

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Banks rule UPI rails; Bizongo under scanner
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Also in the letter:
Four banks bag bulk of UPI beneficiary payments
Driving the news:
Both PhonePe and Paytm Payments Bank use Yes Bank's escrow accounts to process merchant payments.
The bank now handles around 318 million daily transactions on the receiving side.
Axis Bank also stepped up, growing its share from 7% in 2023 to about 10% now.
Why it matters
Concentration risk on UPI:
Also Read:
BFSI's big AI turn to move the business needle for slump-hit IT firms
Purse strings:
Now, as one of the earliest tech adopters, BFSI is also set to lead the AI and GenAI charge.
It's expected to account for the largest share of spending on transformation, around 35–40%, totalling $270-290 billion, per Unearthinsight data.
Accenture, which reported earnings for the March-May quarter, saw BFSI grow the fastest among its verticals, with 13% year-on-year growth.
Muted Q1:
TradeCred files criminal complaint against Bizongo, alleges Rs 69 crore fund misappropriation
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Happy Friday! A small group of banks quietly control most of the money received through UPI. This and more in today's ETtech Morning Dispatch.■ Meesho files for IPO■ ISRO tech transfer■ Luma Fertility fundraiseA small number of banks are quietly dominating the receiving side of the Unified Payments Interface (UPI), India's preferred retail payments system. Yes Bank leads the pack, with nearly 40% market share, mainly driven by merchant payments.Yes Bank has doubled its share of payee-side UPI volumes in just two years.: While most conversations around UPI focus on payer-side risk and app dominance, the bank layer follows a similar pattern – only a few lenders are doing the heavy lifting behind the scenes.NPCI is considering a 30% market share cap for third-party UPI apps to reduce concentration risk. But the enforcement deadline has been pushed back by two years.India's IT industry may finally get a boost , and it's coming from its oldest and biggest client – BFSI. Long the top buyer of tech services, the sector is now expected to drive growth for the $280-billion IT industry, which has been stuck in a low-growth cycle.Banking, financial services and insurance (BFSI) makes up about 30% of the Indian IT sector's total revenue, going by data from Nasscom and analysts.As we reported on Thursday, Indian IT firms are bracing for a weak June quarter , weighed down by sluggish deal pipelines.TradeCred has filed a criminal complaint against Bizongo, accusing the startup of misappropriating at least Rs 69 crore. The complaint, submitted to the Mumbai Police's Economic Offences Wing, names Bizongo's founders, CEO, and major investors, including Accel, B Capital, Chiratae, and IFC.Despite receiving funds from invoice buyers through a controlled escrow setup, Bizongo allegedly diverted customer payments into its own bank instead of routing them through the designated escrow, in breach of contractual terms, according to TradeCred's complaint.This, according to TradeCred, constitutes a double recovery, where Bizongo benefited from both upfront invoice financing and the final payment from customers.Bizongo has already come under scrutiny for weak financial controls, which led to senior exits and a shift away from supply chain financing. The latest dispute highlights growing concerns about governance in India's booming private credit and invoice discounting space.Bizongo, on its part, said it has been steadily paying its dues, bringing down the outstanding principal from Rs 250 crore to Rs 66 crore. It added that a settlement plan has already been shared with TradeCred.The case highlights how rapid growth and opaque business models in startup-led finance can leave retail investors dangerously exposed. TradeCred's move could trigger oversight of platforms offering invoice-based investment products.ETtech Top 5 and Morning Dispatch are must-reads for India's tech and business leaders, including startup founders, investors, policy makers, industry insiders and employees.Interested? Reach out to us at [e-mail] to explore sponsorship opportunities.Sanjeev Barnwal and Vidit Aatrey, founders, MeeshoEcommerce unicorn Meesho has confidentially filed its draft red herring prospectus with Sebi for a Rs 4,250 crore ($500 million) IPO.Backed by SoftBank and Prosus, Meesho recently moved its domicile from the US to India. The company reported revenue of Rs 7,615 crore for FY24, a 33% year-on-year increase, while slashing its adjusted loss by 97% to Rs 53 crore.Meesho joins a growing queue of Indian tech firms gearing up to go public, including Groww Pine Labs , and Urban Company . In FY25, the company processed 1.8 billion orders, demonstrating strong user adoption despite facing valuation markdowns.If all goes to plan, Meesho could become the first horizontal ecommerce platform to list on Indian exchanges. The IPO will be closely watched as a barometer for public investor interest in the scaled consumer businesses, ahead of Flipkart's much-anticipated listing next year.Ecommerce platform Meesho, which filed its papers for an IPO on Thursday, is targeting the largest fresh issue size among new-age companies at Rs 4,250 crore, followed by Rs 4,000 crore of edtech firm PhysicsWallah. ( ET Space regulator and promoter, the Indian National Space Promotion and Authorisation Centre (IN-SPACe), facilitated the transfer of technology to six companies to encourage industry participation in the space value chain.The fertility-tech startup raised $4 million from Peak XV's Surge platform, with participation from Metropolis Healthcare chair Ameera Shah and B2V Ventures chairperson Vijay Taparia.■ AI is eating venture capital, or at least its dollars ( Axios ■ Deerhoof did not want its music 'funding AI battle tech' — so it ditched Spotify ( The Verge ■ The promise and peril of digital security in the age of dictatorship ( Wired