In yet another addition to its existing portfolio services in India, global ecommerce giant Amazon has been looking to introduce its own UPI (unified payments services) in the country. However, the plan is stuck due to concerns around the storage of data within India.
In a report, ET cited sources as saying that multinationals keen on entering the payments space in India with their own inter-bank fund transfer service UPIs are now waiting for more clarity on data storage from the Reserve Bank of India (RBI).
“Both WhatsApp Payments and Amazon Pay have not gone live due to similar reasons. Now, with the draft Personal Data Protection Bill also being put out for consultation, these players have to wait for the final decision,” the report added.
It is being suggested that Amazon has roped in Axis Bank to start issuing UPI handles to users of Amazon Pay.
Earlier this year, Amazon introduced UPI as a mode of payment on its website.
“We are excited about the UPI as it democratises the payments experience for banked customers by simplifying mobile payments across more than 50 banks and powering use cases like money transfers,” an Amazon spokesperson told ET.
The report further said that Amazon Pay, just like other wallet companies, was first affected when the RBI issued the compulsory know your customer (KYC) guidelines for wallet users. “UPI was its bid to capture a larger role in the digital payments space…Even that seems to have been stuck now,” the person said.
Data Localisation: Boon Or Curse For Digital Payments?
In April, the RBI had mandated all payments companies to store their data within India and had given companies six months to comply with the norm.
The development came in the wake of the Facebook-Cambridge Analytica scandal. According to reports, UK-based political consulting firm Cambridge Analytica harvested the profiles of up to 50 Mn Facebook users without their approval during the last US election, raising widespread concern among privacy advocates in India and the government that a similar breach could happen here to sway voter opinion in the upcoming state and general elections.
Later, it was revealed that data of over 87 Mn users was shared with Cambridge Analytica. Recently, Facebook chief Mark Zuckerberg made the revelation that 562K people in India were ‘potentially affected’ by this global data leak crisis.
At the time, the RBI said that only a handful of payment system operators in India and their outsourcing partners store user data in the country, either partially or completely.
The RBI said that the payment ecosystem in India had “expanded considerably”, making it necessary to ensure “the safety and security” of data through its localisation.
In a June 2018 meeting of RBI officials and executives from payment companies, the finance ministry suggested that a possible solution could be that companies would be allowed to store their data offshore as long as a copy was kept in India.
The RBI directive received the support of players such as Paytm, Google, and Microsoft, while the Internet and Mobile Association of India (IAMAI) said that app-makers were already heavily regulated under the IT Act.
Also, a white paper by the Srikrishna committee on data privacy and protection examined the data localisation mandate saying that it could help protect the rights of users and prevent foreign surveillance.
In its Draft Data Protection Bill tabled on July 27, the Srikrishna committee said critical personal data can only be stored in servers located within the country.
Meanwhile, Facebook-owned messaging service WhatsApp has been trying to address the government’s concerns regarding fake news and data localisation, resulting in a delay of several months in the launch of its WhatsApp Pay service in India.
National Payments Corporation of India (NPCI) data revealed that a 4% fall was recorded in UPI number transactions, from 246 Mn in June to 235.6 Mn in July.
The Indian digital payments space is expected to grow five-fold to $1 Tn by 2023. However, delays in the launch of services of global companies such as WhatsApp and Amazon due to regulatory issues might prove to be a hurdle in the growth of the industry.
[The development was reported by ET.]