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Payment pipeline issues block direct bank deposits to crypto-exchanges

Crypto-investors in India took to social media over the weekend to complain that they could not deposit funds into their crypto-wallets, hosted by domestic crypto-exchanges for trading purposes. Most exchanges have now disabled direct bank deposit functions on their platforms due to integration issues between a payments gateway provider and the banks supporting the exchange, three industry sources told MediaNama on the condition of anonymity.

From early March onward, leading private banks in the country began blocking their account and payment services to crypto-exchanges in the country. The decision to shut services to crypto-exchanges was prompted by informal communication from the Reserve Bank of India (RBI) on the risks of crypto-transactions. Further, industry sources said that bank compliance teams are now over-burdened with questions surrounding their depositors’ payments to crypto-exchanges. As a result, legal and compliance teams at banks have also influenced the banks’ decision to stop servicing crypto clients. That said, a few private banks continue to support crypto-exchanges.

As crypto-exchanges had to transition to a new anchor bank, their payment gateway provider had to re-engineer the payment pipelines to these exchanges. These payment pipelines include platforms like Unified Payment Interface (UPI), Immediate Payments System (IMPS), the National Electronic Fund Transfer (NEFT), Real Time Gross Settlements (RTGS) and other systems. As a consequence, UPI is no longer supported by many leading crypto-exchanges. Prior to the current spate of issues, UPI was widely used by crypto-investors to deposit and withdraw funds.

While some crypto-exchanges are now supporting UPI, they are doing so through strategic partnerships with mobile-wallet players as opposed to a natural option provided by their anchor bank and gateway provider. Most exchanges are now instructing customers to directly transfer their funds through IMPS, NEFT or RTGS to the exchanges’ new bank account. The funds transferred to the exchanges’ account will then be reflected in the investors’ crypto-wallet.

However, due to integration problems, new and existing investors are facing issues when depositing money into their crypto-wallets on the exchange. For many users, money has been debited from their bank accounts but the same is not being reflected in their crypto-wallets. The crypto-exchanges, on their part, have assured their users that any funds debited would be reversed in due course. The exchanges are also facing on-boarding problems, particularly confirming and verifying the users’ Know-Your-Customer information. As a result, there are a backlog of investor/user complaints.

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Some of the top crypto-exchanges are working to integrate with a new payments gateway provider to ease the burden on their payments pipeline, said two of the sources quoted above.


One of India’s largest crypto-exchanges has been facing the brunt of heavy trading activity in the last few weeks. Earlier this month, a surge in the price of meme crypto-token Dogecoin led to a significant rise in new users on the exchange. The high demand for Dogecoin was not anticipated by the exchange and as a result it faced trade execution issues. A similar issue played out last weekend with a surge in trading on Shiba Inu, another meme crypto-token.

Below is a screenshot from the WazirX app:

The crypto-exchange said that it working with its banking partner to resolve these issues at the earlier.


CoinDCX, another significant crypto-exchange, also found itself on the wrong end of the banking system a few weeks ago. It found a work around by partnering with MobiKwik, through which users can deposit funds in a Rupee wallet which then could be transferred to the crypto-wallet hosted by the exchange.

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Recently, the company announced that its flagship app allowed users to link their bank account.

According to CoinDCX’s app, Google Pay, PhonePe and other UPI apps are not supported. However, deposits are supported through net-banking or mobile-banking transfers via IMPS, NEFT or RTGS. Customers have to enter the exchanges’ new bank account number, name, IFSC code and then make the transfer through their respective banking channels. The funds transferred would then reflect on the crypto-exchange wallet in due course, it said.

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Below is a screenshot from the CoinDCX app:


Unlike WazirX and CoinDCX, which are crypto-exchanges, CoinSwitch is a crypto-exchange aggregator. That is, it tries to get the prices for crypto-investors by aggregating prices across global crypto-exchanges. The company recently made heads turn when it became an associate sponsor on Disney+ Hotstar for this year’s Indian Premier League tournament. It launched an ad campaign for the series, which is the first major marketing push by an Indian-origin crypto-exchange till date.

The company had disabled bank deposits nearly 10 days ago.

MediaNama has prepared a guide on crypto-currency regulations in India, listing the government’s position over the last few years and various policy recommendations; read it here: A complete low-down on crypto-currency regulation in India

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Reports on banking, payments, fintech and crypto-curencies. Additional reporting on media regulations, data protection and other areas.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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