The Reserve Bank of India (RBI) has not shut the door on WhatsApp's payment gateway WhatsApp Pay however it clarified that it has not yet granted permission to WhatsApp to go live for full scale operations on Unified Payments Interface (UPI) payment system in India.
RBI filed an affidavit in Supreme court and held that that the payment gateway is still under scrutiny and shall only be allowed once all the required compliances are cleared.
The reply by the RBI has been filed in the plea filed by Centre for Accountability and Systemic Change which seeks to restrain the Facebook-owned messaging service Whatsapp from proceeding with its payment systems unless it fully complies with provisions of the RBI.
The RBI states in its reply that the National Payments Corporation of India (NPCI) had sent it the System Audit Report (SAR) and the Post Change Review Report submitted by WhatsApp, along with its comments on compliance status of WhatsApp with the RBI circular dated 06 April, 2018 on ‘Storage of Payment System Data’. The RBI has admitted in the affidavit that it examined the reports and responses and was concerned that WhatsApp was storing some payment data elements outside India beyond the permitted timelines indicated in the circular
As per the RBI it had advised NPCI was to ensure that the payment data elements are not stored by WhatsApp outside India beyond permitted timelines. In addition, NPCI was advised to ensure that WhatsApp does not store any of the payment transaction data elements in hashed / de-identified / encrypted form in its systems outside India. NPCI was also advised not to permit WhatsApp to go live for full scale operations on UPI payment system, till the time they are fully compliant, submitted RBI.
RBI further states that it had initially identified five issues concerning non-compliance at the end of WhatsApp, and NPCI had informed RBI later that two of them had been resolved. The NPCI had told RBI that it shall work closely with WhatsApp to to resolve the remaining three issues by 31 March, 2020. The RBI had advised NPCI to ensure that Whatsapp meets all the compliances requirement.
Subsequently, on 9 June NPCI told the regulator that it has reviewed the “Post Change Review Report III" and confirmed that Whatsapp is in full compliance with the data storage guidelines issued by NPCE and also complies with all the five point requirements advised by RBI. The NPCI has also sought permission from RBI to give a “go live" signal to payment service of WhatsApp.
This is a significant development, as given the wide use of Whatsapp as aprivate messaging platform this will shake up the payment business to a high extend.
The petitioner has sought directions for WhatsApp directing it to comply with Indian laws and appoint an officer who shall address grievances of the consumers and coordinate with investigating agencies, to make it accountable. The petition contended that WhatsApp is a foreign company with no office or servers in India and to run payments service here it is obligated to have its office and payments in India. The reply does not mention the replies to these grievances as they were not directed at RBI.
WhatsApp's payment gateway WhatsApp Pay has been on beta tests for almost two years now and Facebook has been struggling to launch it in India for quite some time now. The Facebook-owned messaging application is reportedly launching its payments option in partnership with three private banks in India in the coming months.