Google Informs Delhi High Court: GPay Not a Payment System Operator, but a Third-Party Application Provider

In its Affidavit, Google told the Delhi High Court that GooglePay or GPay does not require RBI’s authorisation. Google reasoned that it is not a payment system operator (PSO) but a third-party application provider.

About the PIL against GPay

A financial economist Abhijit Mishra filed the Public Interest Litigation. He alleged that Google’s mobile payment app, Google Pay or GPay, is facilitating financial transactions without the requisite authorisation from RBI.

He claimed that GPay was acting as a payments system provider in violation of the Payments and Settlements Act. Since, it has no valid authorization from the central bank of the country to carry out such functions. He has also contended that GPay does not figure in NPCI’s list of authorised ‘payment systems operators’ released on March 20, 2019.

On the other hand, the central bank backed Google. The Central Bank informed the Delhi High Court that Google Pay is a third-party app provider (TPAP). That it does not operate any payment systems. Therefore, its operations are not in violation of the Payment and Settlement System Act of 2007.

Upon hearing the contentions, the Court held that the matter required detailed hearing as it affects the other third-party apps as well. The division bench consisted of Chief Justice D N Patel and Justice Prateek Jalan.

The Affidavit By Google

NPCI authorizes the payment service provider banks and third-party application providers (TPAPs) like Google Pay to conduct transactions on its network. Google, thus, stated that GooglePay works within the NPCI regime and complies with its guidelines and the applicable laws.

It also stated that it will take steps to comply with RBI’s Guidelines on Regulation of Payment Aggregators and Payment Gateways. These guidelines direct that entities providing merchant services, like Google Pay, get registered with the central bank.

Additionally, Google has stated that it will comply with RBI”s 2018 ”data circular”. To explain, as per the data circular all system providers have to ensure that the entire data relating to payment systems operated by them is stored only in India. Google said even though it is only applicable to system providers and not service providers like itself, it is complying with the circular.

RBI on Safe Digital Transactions

In another development, last month, RBI directed payment systems operators to undertake targeted multi-lingual campaigns. That is, through SMSs and advertisements to make users aware of safe and secure use of digital payments. It said in a circular to PSOs and participants that safety and security of digital transactions are most important.

RBI is taking measures to educate users on the safe use of digital payment modes. RBI is doing so through its e-BAAT programmes and organising campaigns. The RBI advises users to not share critical personal information like PIN, OTP, and passwords with third parties.

In spite of these initiatives, incidence of frauds continues to bedevil digital users, often using the same modus operandi users were cautioned about such as luring them to disclose vital payment information, swapping SIM cards, opening links received in messages and mails, etc,

-Reserve Bank of Inda

The Circular also warned public from undertaking banking or other financial transactions through public, open or free WiFi-networks. Additionally, the Circular advises against storing important banking data on the mobile, e-mail, electronic wallet or purse. As a matter of fact, banks and other payment systems operators never ask for such details.

Instances of scammers tricking users into downloading bogus apps; that access critical information stored on devices remain fairly prevalent. For example, the fake Samsung App that scammed users for “free critical updates”. It is, therefore, essential that all payment systems operators and participants โ€” banks and non-banks โ€” continue and reinforce efforts to spread awareness about digital safety, the circular said.

About the Author

Ishan Harlalka
I am a 3rd year law aspirant pursuing BA LLB. I am deeply interested in learning and am always looking forward to gain knowledge about new subjects. In my leisure time, I try to read books of various genres and by different authors. As people from non-law background may find it difficult to understand legal provisions and jargons, I try to write in a way that my articles are easy to comprehend and after reading them, one can discuss them with others.

Did you enjoy this story?

Subscribe now to get the latest updates straight in your inbox. No spam, we promise.

Continue Reading