WhatsApp Pay in ‘Compliance’ with Data Localisation Norms, Now gets NPCI’s Approval

Reserve Bank of India has filed an affidavit stating that NPCI stands satisfied with WhatsApp’s compliance, w.r.t. WhatsApp Pay, with RBI’s data localisation norms.

NPCI states that, “We would like to confirm that WhatsApp has satisfied the data localization requirements based on Cert-In auditor’s reports and we hereby are giving ICICI Bank (payment service provider bank for WhatsApp) the approval to go live,” in the affidavit submitted by RBI to the court. The Supreme Court will be take final decision on the matter.

As a matter of fact, RBI’s affidavit came as a response to an PIL filed by the ‘Centre for Accountability and Systemic Change’, challenging WhatsApp Pay trials. Explicitly, Petitioner Archana Pathak Dave claims that Whatsapp is violating RBI’s data localization norms.

What is WhatsApp Pay?

WhatsApp Pay is a digital platform for making payments. To explain, it will provide users an option to make transactions via WhatsApp to their contact list. It’s a UPI-based payment service that allows users to both send and receive money; developed by the National Payments Corporation of India (NPCI). WhatsApp Pay landed in India in February 2018, in partnership with ICICI Bank. However, it is still on trial basis for a limited number of users.

Also, in April 2018, RBI issued a circular mandating data localisation by all service providers. According to which all “data relating to payment system” are to be “stored in a system only in India.”

Following that, on February 7, 2020, the messaging app received NPCI’s approval to begin its digital payment service in a phased manner.

NPCI’s Approval

In a letter to the NPCI on November 1, RBI made it clear that WhatsApp Pay needs to keep all financial data in India. Additionally, The RBI rules define that payments data, information on payments or settlement transactions, customer data, among other information, has to be stored in India.

Thus, in response, The NPCI made it clear that whatsapp is in full ‘compliance’ with RBI’s data localisation norms.

 “WhatsApp has satisfied the data localisation requirement based on the CERT-In auditor’s report and we hereby are giving ICICI Bank (PSP bank for WhatsApp) the approval to go live,”

NPCI said in a letter dated June 5.

Impact of WhatsApp Pay on India’s Digital Payment Market

Google Pay has been the most used UPI app in India, followed by PhonePe, Paytm and NPCI-created BHIM.

WhatsApp, with its huge user base, has an advantage over other UPI based platforms. It enjoys over 250 million monthly active users which makes it one of the most used apps. Therefore, it has the potential of becoming India’s largest UPI service provider which can take a lot of market share of other UPI based platforms including Google Pay, Paytm etc.

Final Say in the Matter

“Now that NPCI has given clearance on data localisation requirements nothing prevents WhatsApp from going live. It is only a matter of time now,”

an industry official said.

WhatsApp awaits a formal communication from NPCI to launch its UPI-based payment system in India. However, that’s not it; it still needs to have an ‘all clear‘ from the Supreme Court before the launch of its payment method in the market.

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