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RBI To Check WhatsApp Pay’s Adherence To Data Localisation Norms, Says SC

RBI To Check WhatsApp Pay’s Adherence To Data Localisation Norms, Says SC

WhatsApp stores data locally but also mirrors it overseas

NPCI has said that this is not enough to comply with the RBI rules

WhatsApp Pay was launched in May last year and was later discontinued

Supreme Court on Monday (January 14) ordered that the Reserve Bank of India (RBI) be made a party to a petition pertaining to the case to check Facebook-owned WhatsApp’s adherence to data localisation norms for setting up of its proposed payments business — WhatsApp Pay — in the country.

The court’s  move was made in response to the petition filed by a not-for-profit organisation, Centre for Accountability and Systemic Change (CASC), which has alleged WhatsApp has not complied with RBI’s April 6, 2018, data localisation circular, that mandated all payments operators and banks to store data of their  Indian users’ within the country by October 15, 2018.

A beta version of WhatsApp Pay was launched in May last year and was later discontinued. And since then, its launch has been delayed over issues surrounding RBI’s data localisation norms. According to the National Payment Corporation of India (NPCI), WhatsApp has not yet given a timeline for complying with the RBI’s circular. Although WhatsApp has said that it stores data locally but it also mirrors the same overseas, which NPCI said will not be enough to comply with the rules.

Meanwhile, US ecommerce company Amazon has already started storing local payments data in its servers in India without making a copy of it in its overseas servers.

Last year in August, the government also said that the company can’t launch WhatsApp Pay till it sets up an office and recruits a team in India. CASC has also challenged WhatsApp’s failure to appoint a grievance officer. In a bid to smoothen such regulatory hurdles, WhatsApp appointed Komal Lahiri as its first grievance officer for India, and Abhijit Bose, cofounder of payment device maker Ezetap, as the head of WhatsApp India in November 2018.

However, the NGO has protested that a grievance officer for India cannot be based in the US. WhatsApp CEO Chris Daniels then placed a formal request seeking RBI’s approval for expanding its payments service across the country. RBI then sought NPCI’s opinion over the issue.

WhatsApp has time and again maintained that it has worked closely with the NPCI, complying with all the Indian guidelines to launch its payments service in India. However, it has been mired in controversies over data localisation and the spread of misleading news on its platform.

On Monday, a division bench of Justices RF Nariman and Vineet Saran have asked advocate Virag Gupta, appearing for the NGO, to file an application seeking to make RBI as a party to the plea in a week’s time.

WhatsApp has over 200 Mn users in India, with over one million users said to have tested its payments service during its short-lived beta launch in 2018. Since then, Whatsapp has been trying hard to re-enter into India’s digital payments segment, which is expected to reach $700 Bn by 2022.