Flipkart-backed online payments platform PhonePe has slammed foreign payments companies for making a hue and cry over the RBI's April 6 circular that mandated all payments companies operating in India to store data only in India. PhonePe hinted that foreign companies have been avoiding processing data in India as they don't want to pay taxes.
"Today most governments around the world recognise financial data as a massive source of national wealth creation, and are actively plugging regulatory loopholes that would allow foreign companies to exploit local market data without paying fair taxes," PhonePe said, agreeing that all digital payments data should be "processed" and "stored" in India.
With the emergence of fintech industry in India, the government has increased its scrutiny by asking payment companies to store data within the national boundary. While local payments companies like Paytm, MobiKwik and PhonePe have backed the RBI decision, foreign players like Facebook, Google, Mastercard and Visa have decried the move, seeking more time to come up with the solution.
However, the central bank has given the October-15 deadline to comply with the order. The government is framing a comprehensive Consumer Data Protection Act. Tasked with this exercise, the Justice Srikrishna committee presented its draft Data Protection Bill, 2018 in July 2018, recommending sweeping changes to this framework to make data collectors liable for harm caused to an individual "as if the consent form were a product".
"Think about it ... If WhatsApp Pay and Google Pay (Tez) are forced to process digital payments transactions only in India, then FB and Google can't claim the revenues generated from these apps fall under foreign jurisdiction, just because their data servers are abroad," the company said. It added that once data is stored in India, these internet giants will not be able to share Indian users' financial data with 'foreign' platforms like Adwords and Facebook Ads.
PhonePe said it believed that data localisation is critical for the long-term security of any country's financial services sector. "We also store all our data on India servers only," the startup said in a blog.
Vouching for a level-playing field, the company said all payments companies -- whether domestically owned, FDI-funded or 100% foreign companies -- doing business in India must abide by the law of the land and protect our citizen's financial data and pay fair taxes on income earned in India.
"There is a need for India to shore up its digital payments infrastructure so the country can survive hostile attacks by foreign state and non-state actors alike," said PhonePe. Raising the national security concern, PhonePe said if the payments systems are hosted abroad, the government can't prevent foreign actors from "spying on Indians' financial data or thwart cyberwarfare attacks. It said the government also can't guarantee continuity of critical payments services if a foreign government suddenly imposes sanctions on India.
India's largest online payments company, Paytm, has also slammed Facebook-owned WhatsApp Payments for creating "custom close garden" instead of working on India's open platform UPI.
In its April-6 circular, the RBI had said that to ensure better monitoring, it is important to have unfettered supervisory access to data stored with these system providers. "This data should include the full end-to-end transaction details," it had said.
(Edited by Manoj Sharma)