WhatsApp Pay stuck in beta testing due to non compliance of data localisation norms: RBI

About a year ago even before WhatsApp started beta testing of its UPI payments services, the Indian government had come out with a set of data localisation norms to ensure that the financial data of the company does not go outside the borders and cannot be leveraged by other nations.

It had created a lot of problems for WhatsApp as, the beta testing of the service - limited to 1 million people - could not be taken to the next stage until it followed the norms. The Facebook-owned instant messenger application did reflect that it was in the process of setting up local data centers to follow the norms and then execute mass rollouts of the service.

However, in a writ petition filed by Centre for Accountability and Systematic Change (CASC), an NGO, WhatsApp’s compliance standards were questioned, and the issue of lack of a grievance officer was brought to light. It had also challenged WhatsApp for non-payment of local taxes in this petition.

It's worth noting that WhatsApp had hired Komal Lahiri as a local Grievance Officer.  It's not clear - why the NGO raised the issue of such requirement but Lahiri is still based out of Bay Area Silicon Valley (as per her LinkedIn profile). There may be a concern and demand for the officer having a local base for effective proceedings.

To this RBI has responded via an affidavit declaring that WhatsApp is still not compliant with the data localisation norms in India. Even though it set up a mechanism to store data in India last October, this center merely copies the data locally while the original information is still available on the data servers abroad.

This defies the whole purpose of data localisation, a protective policy for Indian consumers of WhatsApp in the brewing data wars.

With this, RBI is also looking to expedite the process of compliance with the data localisation norms without affecting the user experience on the applications and services, reports ET.

The apex bank in India had circulated the norms on April 6 last year which said that the data of the users shall “ONLY” be stored in India. These payment companies had requested to remove the word “only” but RBI did not recede to this demand.

ET’s sources also entailed that WhatsApp India head approached NPCI MD & CEO Dilip Abse to get the permission to execute mass rollout of the UPI based payment service in its largest market - India - that has 200 million monthly active users. But this approval is unlikely to be given to the company until the norms are complied with.