IT ministry wants to know how WhatsApp plans to store its payments data

The Union IT ministry has sent a letter to the National Payments Corporation of India (NPCI) — the umbrella body for digital payments in the country — seeking details about how instant messaging service WhatsApp plans to store data for its payments feature, according to a report in The Economic Times.

Facebook-owned WhatsApp has been running pilots for its payments service, which is based on the Unified Payments Interface (UPI) system operated by NPCI.

According to multiple reports, the service is expected to be rolled out next week and WhatsApp is said to have partnered with private banks including HDFC Bank, ICICI Bank and Axis Bank for it.

According to the report that cites two government officials, the ministry wants to know how the data of Indian users will be shared with the US-headquartered parent company. 

Reserve Bank of India (RBI) had earlier directed all banks, wallets, and prepaid instrument operators to store all data related to users and transactions locally.

The report stated that the IT ministry's recent letter has also been addressed to the central bank.

The IT ministry had written to NPCI on the same issue in the past as well.

“The department was not very convinced with the response from NPCI, so it has (again) asked explicit questions,” one of the officials cited above was quoted as saying. 

NPCI had replied to the first letter in April.

"We are asking them to respond more clearly on how they will ensure that adequate measures are taken to store data in India,” the person added.

He further stated that the ministry has asked whether WhatsApp was planning to share any data with its parent company and if yes, then what kind of data as NPCI has said that sharing data with third parties was not allowed.

"It also says that some data which is not of importance can be given [out]. We are asking what that data is [sets which can be shared and which cannot be shared],” the person was quoted as saying.

For its part, WhatsApp has said that its payments feature is still in the beta testing phase.

WhatsApp had triggered a controversy when it launched the beta version of the feature in February. 

Vijay Shekhar Sharma, founder and chief executive officer of One97 Communications Ltd, which runs digital wallet Paytm, had suggested that NPCI had bent the rules to suit WhatsApp.

“Facebook is openly colonising our payment system and is customising UPI to their benefit,” Sharma had been quoted as saying by The Economic Times. "UPI was built as an India Stack, now some American monopoly arm-twists UPI for customer implementation."

Sharma had also raised other concerns such as security of the payments and interoperability — the ability to transfer money between wallets of different companies.

In response, NPCI had said WhatsApp would have to abide by all guidelines before the final version of its payments feature is rolled out. These include interoperability and supporting multiple payment options including Bharat QR code.

WhatsApp has a huge user base in India of more than 200 million. Its payments feature would offer direct competition to Paytm's wallet and Google's Tez service.