The main bone of contention seems to be the Reserve Bank of India’s recent data localisation rule.

Apple shelves plan to launch UPI-based payments service amid unclear regulations
Atom Tech Shorts Friday, September 07, 2018 - 10:35

If you have been hoping to use Apple Pay in India, you may be in for some disappointment since the US tech giant has decided to put on hold its plans to launch its digital payments facility.

According to a report in Economic Times, the major reason for this is the strict regulations that the Indian government and the Reserve Bank of India have imposed, particularly with regard having servers within the country for holding the data collected.

It is not as if Apple alone is facing this issue. Amazon and WhatsApp have been facing similar issues and haven’t been able to formalize their payments channels though they have made every other arrangement, including the tie-ups with the banks. In the case of WhatsApp, there is an additional issue with regard to the 2-factor authentication.

Apple is also having to deal with a similar issue since it wants it fingerprint identification to be accepted as an authentication method instead of the OTP or other 4/6digit authentication. Apple has probably decided to wait for more time in the hope that the regulatory authorities will ultimately relent and accept the relaxations.

Interestingly all three proposed payments channels have the UPI platform of NPCI as their base. And besides the three, other existing players like Mastercard, Visa and PayPal are also confronted with the same localization of server issue.

Google, which has recently renamed its payments app as Google Pay from Tez, is one company that may comply hosting a server in India to store the data, but the company is yet to take any concrete steps in this direction. They appear to be watching and waiting as well.

Apple Pay is already active in many countries across the globe; Australia, Canada, Mainland China, France, Hong Kong, Ireland, Italy, Japan, New Zealand, Russia, Singapore, Spain, Switzerland, the UK, the US, and Taiwan are all territories where Apple Pay is used by people. India would be an important market for it as well.

Issues with launch of Apple Pay is just one of the latest in a series of setbacks the company has had to encounter in India. It has had a dismal show in terms of sales of its iPhones; it has been having an ongoing feud with the government on relaxing the import duties on the components it brings in to build the iPhones in India and several top-level executives have resigned and left in the past few weeks.

These companies are trying to remind the government of its objectives under Digital India and how these regulations are discouraging more players coming in and making the digital payments sector grow to the potential in the country.

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