WhatsApp Payments India Launch May Get Delayed Over Data Localisation Concerns

The year-end launch of WhatsApp Payments in India is reportedly getting delayed because of the government’s concerns over the messaging platform’s data localisation compliance.

According to a media report which cited sources close to the development, the Indian government and apex financial regulator Reserve Bank of India (RBI) have expressed concerns about some clauses in WhatsApp Pay which might delay the launch.

“The RBI had said in June that system providers will be allowed to process data outside India but they will have to bring it back to India within 24 hours of processing and that the data should be erased from foreign systems. There are issues and some red flags regarding data processing and storage by WhatsApp,” a source reportedly told Business Standard. 

Report also added that one of the four top consulting firms is doing a third-party security audit to check the security compliance of WhatsApp Payments.  In response to an Inc42 query, WhatsApp did not share a comment on the recent development. However, the global CEO Will Cathcart had earlier said, “We have done tremendous work to comply with data localisation requirements and will make sure we do this in a way that builds on top of the system India has set up with UPI and the bank partners that we are working with.”

 India is WhatsApp’s largest user base with over 400 Mn active users, out of its 1.5 Bn global user base. This underlines the potential impact that WhatsApp Payments service could have on the India’s payments sector.  

Earlier, while speaking at the WhatsApp Delhi event in July, NITI Aayog CEO Amitabh Kant also acknowledged India’s affinity for WhatsApp’s easy and simple user interface, and said “I believe it is a very powerful medium and the launch of WhatsApp Payments can prove to be a quantum leap for the digital payments ecosystem in India.”

Data Localisation Concerns Around WhatsApp 

Earlier in July, during his maiden visit to India, WhatsApp’s global head Will Cathcart said that the company has successfully launched a pilot of WhatsApp Payments on the UPI standard, and will be launching the service for all Indian users by the year-end.

Following this in September, UPI’s parent body National Payments Corporation of India (NPCI) had asked WhatsApp to make changes in its policy to get the final approval for the launch of payments in India. NPCI had asked the instant messaging app to make changes in its data-compliance framework that prohibits storing payment data outside of India.

The Reserve Bank of India (RBI) mandates payment service providers and third-party payments app to store key payment data only in India. “The entire payment data shall be stored in systems located only in India,” RBI said in reference to its ‘Storage of Payment System Data’ directive issued on April 6, 2018. The guidelines also elaborate that if the data is processed abroad, then it should be deleted from the system abroad and brought back to India within 24 hours.

Moreover, the Indian government has been continually pushing for data localisation mandate through multiple policy drafts including ecommerce policy, intermediary guidelines, and data protection act. 

Recently, the electronics and information technology ministry Ravi Shankar Prasad said the government will not allow “sensitive and super-sensitive data” to go out of the country. He also added that there should be a balance between data availability, utility, innovation, and data privacy.