India's Data Localisation Decision Leaves Global Digital Payment Firms in a Bind

With the government on Monday saying it will not relax the Reserve Bank of India's (RBI) October 15 deadline for data localisation, the road ahead has become tough for global digital payment providers who have sought more time to comply with the guidelines.

The RBI guidelines say that all digital payment firms like Google Pay, WhatsApp and others must store data locally for their businesses. The deadline to comply with the norms ended on Monday.

In a statement, WhatsApp said that in India, almost 1 million people are testing WhatsApp payments to send money to each other in a simple and secure way.

"In response to India's payments data circular, we've built a system that stores payments-related data locally in India," a WhatsApp spokesperson told IANS.

"WhatsApp payment is useful for people in their daily lives and we hope to expand the feature to all of India soon so we can contribute to the country's financial inclusion goals," the spokesperson added, without mentioning if the Facebook-owned company has finally submitted a compliance report sought by the RBI.

With over 200 million users, India is the largest market for WhatsApp.

Google Pay has reportedly asked the government for more time on this.

In September, Google Chief Executive Sundar Pichai wrote to IT Minister Ravi Shankar Prasad, advocating free flow of data across borders as such a step will encourage global companies to contribute to India's digital economy.

Pichai said that the free flow of data across borders would also benefit Indian start-ups looking to expand globally.

"Free flow of data across borders - with a focus on user privacy and security - will encourage start-ups to innovate and expand globally and encourage global companies to contribute to India's digital economy," Pichai wrote.

"The Google team in India will be in touch with your office to follow up on some of the specific topics we discussed during our meeting," said Pichai, thanking Prasad for his visit in August to Google's Mountain View campus in the US.

On Monday, sources said the government is not in favour of extending the deadline for RBI's data localisation plan. "The government is also not in favour of the data-mirroring idea," they added.

According to India's largest digital payment provider Paytm, all payments data of the Indian users must be processed and stored only within the country and must not be allowed to go out of the country, not even for processing.

"We have complied with this mandate since day one and have welcomed this initiative right from the beginning," a Paytm spokesperson told IANS.

"It is important that we do not become mere Internet colonies for global companies and make every organisation accountable towards the security and privacy of data of our fellow countrymen," the spokesperson added.

This is a key matter of national interest, said Paytm, adding that we must discourage inappropriate use and transfer of data.