To ensure the safety and security of payment system, the Reserve Bank of India (RBI) has asked all payment players to ensure data related to payment system be stored inside the country within six months.
The Apex bank in its regulatory policy observed that currently only certain payment system operators and their outsourcing partners store the payment system data either partly or completely in India. The notification will follow with detail instruction in the upcoming week, the bank added.
Ensuring the safety and security of payment systems data by adoption of the best global standards and their continuous monitoring and surveillance is essential to reduce the risks from data breaches while maintaining a healthy pace of growth in digital payments, noted the regulator in a press statement.
At present in payment space, there are players like Paytm, Itz Cash, CC Avenue and Citrus as well as global players such as Uber, WhatsApp, Amazon, and Google. The companies who have servers in India will not be bothered by the development.
Importantly, global players including Visa and Mastercard, who have servers in the US, will have to now relocate them to India.
Silicon Valley-based Stripe, Mozido, and Payoneer have also set up offices in India. Meanwhile, Facebook is also piloting a payments service in India with a UPI backbone for its WhatsApp Pay.
The ruling will deter the foreign players, who generally have unified systems and work across the globe with same application servers.
Post demonetisation, the digital payments ecosystem witnessed a growing interest of foreign players, looking to cash-in on the growing opportunity in India. Payments ecosystem in the country is being built on public infrastructure like UPI and Aadhaar that allow open-architecture and an inter-operable payment system to evolve.
India’s digital payment space is expected to grow the segment by about five-fold to $1 trillion by 2023. It is currently estimated to be around less than $200 million, according to Credit Suisse report.
As per recent NPCI data, total UPI transactions in October 2017 doubled to 76.96 million from 30.8 million in September 2017. Google is one of the most prominent international players that joined the race in September with its digital payment app Tez.
Earlier, on the similar line, department of telecom had reportedly wanted server locations of global e-commerce companies to be in India only, however, the ministry of electronics and information technology did not support the restriction at that time.
Besides in separate clause, on virtual currency (VC), RBI said that entities regulated by them shall not deal with or provide services to any individual or business entities dealing with or settling VCs.