India's booming digital payments market, which is expected to mushroom from less than $200 billion currently to $1 trillion over the next five years, had lured several global players, including Facebook-owned WhatsApp and Google. But the country's new thrust on data localisation seems to have started scaring them away.
Apple Inc has shelved plans to introduce Apple Pay, a Unified Payments Interface-based payments platform, in India, according to The Economic Times. This development comes at a time when WhatApp Payments and Amazon's plans to launch its own UPI payment service in the country have run into regulatory trouble.
"Apple will not launch payments in India yet. They are waiting to see how the regulatory landscape shapes up," a source told the daily. That's a U-turn from the company's stance less than a year ago. "What Apple Pay does is make that process easy, integrated and safe. We absolutely want to bring Apple Pay to the market here," Eddy Cue, Apple's senior vice-president for internet software and services, had told the daily last October. Apple Pay is currently available in Australia, Canada, Mainland China, France, Hong Kong, Ireland, Italy, Japan, New Zealand, Russia, Singapore, Spain, Switzerland, the UK, the US, and Taiwan.
People in the know told the daily that although Apple had held discussions with a few leading banks and the National Payments Corporation of India, which manages the UPI platform, the Silicon Valley giant's main worry is the RBI's recent data localisation rule.
In April, the apex bank had released a 'Statement on Developmental and Regulatory Policies', which announced that "all payment system operators will ensure that data related to payment systems operated by them are stored only inside the country within a period of 6 months". The idea, it said, was "to have unfettered access to all payment data for supervisory purposes".
Subsequently, the Justice Srikrishna Committee report on Personal Data Protection also recommended that every data fiduciary has to store one live, serving copy of personal data in India. The draft personal data protection bill is currently open for public feedback, which the government yesterday extended the deadline for comments till the end of this month.
The RBI's diktat has not only put the brakes on Apple's plans, but also landed several other foreign companies in a regulatory grey zone, including Mastercard, Visa, Amazon, WhatsApp and PayPal. Even Google, which recently rebranded its India payment app from Tez to Google Pay, has said that it is assessing the evolving situation around data localisation, its aggressive plans for a bigger share of the market notwithstanding.
Apart from regulatory hiccups, Apple had also run into technical and design hurdles related to the flow of payments on UPI. Citing a banker, the daily added that Apple wanted to include fingerprints as a mode of authentication for UPI payments, instead of the typical six- or four-digit number used for the purpose, but NPCI had refused. "NPCI has prescribed that transactions can be authenticated by biometrics only when they get validated by UIDAI [the Aadhaar-issuing body]," said the banker, adding, "NPCI does not allow biometrics collected by devices as a mode of authentication."
Apple, in fact, has been facing headwinds in the country on other fronts too, be it churn in its India leadership team or running into an impasse with the telecom regulator over supporting its do-not-disturb (DND) app. The iPhone maker finally agreed to include about 75% of the features of the DND app in its new operating system last month.