Digital payments industry divided over data order

Others such as payment provider PayU, owned by South African media conglomerate Naspers, has sought ‘data mirroring’ or data storage in other locations besides India, to avoid global payment networks from being disrupted.

“(There is) no reason why companies should be opposed to the order since most countries such as China, Russia and many countries in Europe require companies to not only store data locally but also process it within the country,” said Kiran Vasireddy, chief operating officer for the payments business of Paytm, which has been storing user data within India even before the Reserve Bank of India mandated it in April.

Flipkart-owned PhonePe, which also stores data locally, expects no disruption in operations from the RBI mandate.

“India is emerging as a huge democratically open digital economy and it has opened doors for any player to come and operate here, so it’s important that there are right safeguards to protect consumer interests in the long run,” Hemant Gala, head of payments and banking relations of PhonePe told ET. RBI’s directive in April directed all digital payment companies operating in India to set up data storage facilities within the country by October.

While the payments ecosystem has grown in India, it needs “unfettered supervisory access” to the transaction data to ensure better monitoring of the network.

India, the last major open market for internet companies, has seen global firms launch digital payment platforms such as Google Tez, Amazon Pay, and WhatsApp to tap the growing opportunity in the country. Indo-US business advocacy groups such as the USIBC and US-India Strategic Partnership Forum (USISPF) have also raised concerns with authorities over the RBI’s directive.

Susan Ritchie, vice president of Technology, Media, and Telecommunications, USISPF, said “The best course of action is to allow time until the global companies are able to conduct their reviews on impact of this order.”

Not all global firms subscribe to the view.

Rajan Anandan, vice president for Google India and South East Asia, told ET recently that the company follows local laws and local legislation, so whatever India decides it will “comply” with it.

NASSCOM RAISES CONCERNS
On Thursday, technology lobby group Nasscom has also expressed its concerns in a representation sent to RBI over the mandate. The grouping which consists of members both India-based and from global corporations, has opposed the central bank mandate, sources told ET.

“This is not just a payments issue. It hits global outsourcing. It may not be feasible for many companies to replicate systems in India. This move will also hit fraud mitigation,” said one of the people privy to details of Nasscom’s stand.

Digital payments provider PayU India is asking for data replication — the ability to store both within India and another location.

“Global companies often exchange best practices or release new products based on different markets. For example, we may want to use a checkout page for PayU India that has been developed in another market, and needs to be first tested based on user data. Restricting movement of data can make this difficult,” said Amrish Rau, CEO of PayU India.

American technology giant IBM has also cautioned that any sort of protectionism is often reciprocal.

“In the digital world, like any other natural resource, flow of data is akin to ‘digital trade agreements’. Like any other form of trade, protectionism is often reciprocal — which means in steady state, restrictions apply both ways,” said Karan Bajwa, managing director, IBM India Pvt Ltd.