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Delhi HC Asks RBI, Centre To Respond To Plea For Action Against Google Pay

Delhi HC Asks RBI, Centre To Respond To Plea For Action Against Google Pay

The Delhi High Court was hearing a petition on Google Pay’s interoperability

The petition alleged Google Pay forces consumers to create a new UPI ID

Meanwhile, WhatsApp Payment is stuck in policy-compliance cases with SC and CCI

The Delhi High Court has issued notice to digital payments platform Google Pay, seeking suspension of its operations for allegedly not following unified payments interface (UPI) interoperability.

According to a report in Bar and Bench, the notice was issued to the Government of India, Reserve Bank of India (RBI), Google India Digital Service and other respondents by Justice Asha Menon. The high court has granted three weeks’ time to Google Pay and other respondents to file their response and it would list the matter for hearing once the pleading is complete.

The Delhi high court was hearing a petition filed by Shubham Kapaley, on May 5, alleging that Google Pay forces consumers to create a new UPI ID or VPA to use its platform and shows them as new users. The petitioner alleged that he tried to make multiple payments through the Google Pay application, none of which allowed him to add his existing UPI ID.

Kapaley highlighted that this flouts NPCI guidelines on interoperability as UPI payment platforms need to give a choice to users to transact using their existing IDs. As per the NPCI rules of January 2017 circular, during UPI registrations “the merchant should allow the customer to enter his/ her VPA as an equal choice or option and not force creation of VPA for purchase or utilising the services on the merchant app.”

The petitioner had also sought a thorough third-party and independent investigation to ensure that Google Pay was in compliance with all other directives and guidelines issued by NPCI and RBI. Besides this, they also wanted “proper punitive action” and imposition of a “hefty penalty” of at least 10 times the revenue of Google Pay, which may be contributed towards the Covid-19 Relief Fund in India.

A Google spokesperson reportedly said, “The Google Pay app enables users with any UPI ID to make donations. Some users might not have seen this as support was rolled out in phases.”

UPI Market Brawling Over Policy Compliance?

Currently, the UPI segment is dominated by Google Pay, PhonePe and Paytm. Meanwhile, WhatsApp Payments has been trying to enter the segment since 2018 and has started making some progress to launch its services in India soon.

The company was planning to launch its services in May finally, but has been hit by the Supreme Court and CCI hurdle. Over two major reasons, its compliance to data localisation policy and abuse of dominant position in the messaging app. Both the petitions have highlighted that WhatsApp Payments does not have a standalone app, but relies on its instant messaging app to offer the service.

The first petition, filed by  Delhi-based think-tank Good Governance Chamber in Supreme Court, noted that the data sharing policy of WhatsApp is “inconsistent” and “non-compliant” with the guidelines issued by the NPCI and RBI, therefore, the system cannot be permitted to operate under UPI. The SC has directed RBI and NPCI to file their responses over three weeks.

Meanwhile, the second petition, filed by a lawyer in mid-March with Competition Commission of India (CCI), highlights that WhatsApp is abusing its dominant position in the instant messaging market to offer digital payments services, and it would affect the competition. The case is still in the initial stages and the CCI has not reached a final decision yet.