After WhatsApp, Amazon India's UPI plan faces heat over data localisation debate

The recommendation of Reserve Bank of India over data localisation is believed to be a major hurdle in offshore tech firms, especially who are eyeing to join UPI bandwagon.

While Facebook-owned WhatsApp still struggling to launch its UPI-based payments service, e-commerce major Amazon India is facing the heat from the banking regulator and government agencies.

The US-based firm, which was planning to launch UPI-based payments service under its Amazon Pay brand will have to wait for a green signal from RBI with a proper action plan on data storage, reports ET.

The development comes against the backdrop of a panel working on the Indian government's cloud computing policy demanded data generated in India to be stored within the country.

A debate over mirroring of data (it means that companies need to store a copy of the data in India while another can be kept outside the country) is also going on, and RBI is yet to come up with a final call on it.

This is the second time when Amazon is facing the wrath of government’s regulation in payments service. It had to face the wrath of  RBI’s compulsory KYC (know your customer) guidelines for its wallet business.

Meanwhile, Amazon has been aggressively investing in its Indian payments arm Amazon Pay and wanted to add UPI in its kitty to give a tough fight to competitors in e-commerce cum payments firm such as Flipkart-owned PhonePe and Paytm.

PhonePe and Paytm have been leading in terms of UPI transactions share.

According to ET sources, Amazon has already roped in Axis Bank to start issuing UPI handles to Amazon Pay customers. It is worth to be noted that the e-commerce marketplace had integrated UPI as a mode of payment on its website.

The firm had earlier claimed that more than 60 per cent of its transactions in India is driven by digital payment modes including net banking and Amazon Pay balance in 2017.  

With service like UPI, it could be a game-changer for Amazon as far as grabbing a larger share of digital payments is concerned. However, its UPI launch would be largely based on how it addresses regulator and government concerns over data storage.