The confusion over maintaining data within India, as mandated by Reserve Bank of India has resulted in delays in rolling out the digital payments features by Amazon. US-based retail giant Amazon had chosen NPCI’s Unified Payments Interface (UPI) as its payments channel and the banking partner it had chosen in Axis Bank.
Trial runs were carried out and Amazon was all set to launch the facility for all its customers; but the lack of clarity on the subject is holding them back.
Interestingly, it is the RBI which is keeping the issue from moving forward according to people who have closely followed the issue. First it was a joint announcement by both the government of India and the RBI that those companies offering digital wallets or facilitating digital payments on their platforms have to store the data collected during such transactions in servers located within the country. The announcement came in April this year and the companies were given a 6-month window to make the necessary arrangements for this.
On their part some of the operators, which included old players like Visa, Mastercard etc. wanted to know if the requirement of the RBI can be met with just storing a copy of the data in India and they may continue to store one set on their overseas service.
It is learnt that the government, through a note of which a copy was sent to RBI as well, had indicated that it would have no issue if data mirroring were to be permitted, meaning that the companies can hold the data overseas but a copy must be available in India for immediate access by the agencies when and if the requirement arises.
Unfortunately, RBI is yet to react to this note by the finance ministry and that is one reason this entire process is being held back.
Meanwhile there is the new legislation, on Personal Data Protection Bill, which is awaiting Parliament nod and it can have direct bearing on this same issue. It is not certain by when the government will be able to conclude the process of introducing the Bill and having it passed. It can therefore be concluded that whether it is Amazon or WhatsApp, they will all have to wait till the air is cleared and RBI gives its green signal to them on launching their digital payments initiative.
UPI, meanwhile, has been recording tremendous growth in terms of number and value of transactions through different operators. The list of players using UPI has also been expanding. Paytm, PhonePe owned by Flipkart, Google Tez and now Amazon are all hooked on to UPI and NPCI reports it concluded 235 million transaction using UPI worth an impressive Rs 45,845 crore in July.
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