In India, a delay for WhatsApp Pay?

Reports came Wednesday (Oct. 9) from the Business Standard, and through Money Control, that there are compliance issues tied to data processing regulations that may keep the payment service from launching by the end of this year, as has been anticipated.

WhatsApp is owned by Facebook, and the messaging service has more than 450 million users in India. A beta version of the payments service had been brought to roughly 1 million users earlier in the year.

As has been reported, and as focuses on data processing and storage, regulators in India have mandated that data can be processed outside of the country, but that same data must return to and reside on servers located within the country.

The government and the Reserve Bank of India have reportedly expressed concerns that WhatsApp may not demonstrate full compliance with those regulations, and so the rollout may in fact be delayed.

The practice is known as data localization — and data that is processed offshore, so to speak, needs to be returned to the servers located within the country within 24 hours. The WhatsApp Pay platform is based on the Unified Payments Interface, also known as UPI. Other payment platforms that are already based on UPI and on offer in India include Google Pay, PhonePe and Paytm.

As Entrepreneur India reported, Deloitte, a member of the “big four” consultancies, is in the midst of auditing the security compliance of WhatsApp Pay.

We noted in this space earlier in the year that the move to offer WhatsApp Pay has come amid growing demand for digital payments in India, which exists as Facebook’s largest market.

In July, Facebook CEO Mark Zuckerberg said on an earnings call, “It’s a regulatory approval question in India at this point,” and added that “we’re also working beyond India in a number of other countries and hope to have this rolled out to a large percent of the people who use WhatsApp within the next year.”

Increased adoption of mobile technology has set the stage for digital payments adoption, as has the widely publicized demonetization efforts within India. There are estimated to be more than 1 billion mobile phone users in the country and the digital payments market could be worth as much as $1 trillion by 2023.

Last month, the National Payments Corporation of India (NPCI) had requested changes to WhatsApp’s framework for data localization. In the past, NPCI had said that Facebook and WhatsApp had not stated clearly whether data would be stored “only” on India based servers or if it would also be stored on servers located overseas.


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