WhatsApp is working to comply with central bank regulations on storage of payment data, according to two people familiar with the development, indicating a turnaround in the stance adopted by the Facebook-owned messaging application, which has resisted demands to store payment data of Indian users exclusively within the country, so far.
WhatsApp’s payment feature called WhatsApp Pay has been in a beta mode since February last year and has been restricted to only 1 million users in the country, pending regulatory approvals.
“We plan to comply with RBI guidelines. Only some engineering work is left,” a senior Facebook executive told ET. This will mean that servers holding financial data of Indian users will now be located inside the country alone.
Until now, the American company has been seeking approval to merely mirror or copy payments data within India, while also storing the same data in its overseas servers.
Indian regulators have had no truck with this plan insisting that in order to be fully compliant, WhatsApp must locate all servers used to store financial data pertaining to Indian users within the country, as mandated by the Reserve Bank of India in April 2018.
Last month, in an affidavit submitted to the Supreme Court, the RBI stated that WhatsApp had not complied with its data localisation norms. “WhatsApp has realised that there is no way to get away with it,” said a senior official with the ministry of electronics and IT (MeitY). “We still don’t have it in writing though,” the official said.
WhatsApp Pay is designed to run on the Unified Payments Interface (UPI) created by the National Payments Corporation of India (NPCI). This allows users to conduct peerto-peer and business transactions for even micro payments through their bank accounts.
WhatsApp and NPCI did not reply to queries from ET on the development.
The RBI, in its affidavit to the Supreme Court, said it is exploring regulatory actions to expedite compliance of data localisation.
‘PAYMENTS BUSINESS MAY HIT $1T BY 2023’
However, the banking regulator is being cautious to make sure a consumer’s transaction experience is not disrupted by any such measures. Apart from concerns of not storing data exclusively in India, regulators had expressed concerns on lack of clarity on how payment data will be shared with Facebook and other third-party service providers.
For WhatsApp, India is its largest market with over 200 million monthly active users. Apart from homegrown Paytm and PhonePe, owned now by Walmart, WhatsApp’s payment service competes with Google’s UPI-based payment service Google Pay, which claims 30 million active monthly users in India.
WhatsApp recently appointed Ezetap founder Abhijit Bose as its India head.
India’s e-payments business is slated to grow five-fold by 2023 to $1trillion (Rs 70 lakh crore), according to investment bank Credit Suisse.
UPI clocked close to 800 million transactions with Rs 1.3 lakh crore being settled in March, according to data shared by NPCI. While the number of transactions jumped 18.6% as against February, the amount of money transferred went up 25% compared to last month, the highest in the last six months.
“The payments market in India is huge. WhatsApp, Google Pay, Bhim, PhonePe and Paytm — all will grow,” the MeitY official told ET.
Despite hectic lobbying, the central bank did not withdraw or dilute its order requiring all payment firms to store Indian user data exclusively in the country by October 2018. This forced global firms such as Mastercard and Visa to comply with the rules.
“The payment space is becoming fairly competitive but the opportunity is still there and the key is disruption at the lower end of the value chain — grocery, transit etc. Considering Indian demographic and geographic complexity, a non-physical model in acquiring, probably via partnerships or creating a self-acquiring incentive will help existing and new-entrants garner volume share,” said Vivek Belgavi, partner and leader, fintech at PWC India.