The Reserve Bank of India has mandated all payments system operators working in India to ensure that data related to payment systems operated by them is stored in the country. The operators will have a period of six months to comply with the RBI directive. The central bank will issue detailed instructions in a week.
“It is observed that at present only certain payment system operators and their outsourcing partners store the payment system data either partly or completely in the country,” the RBI said in a report during Thursday’s policy review announcement. “In order to have unfettered access to all payment data for supervisory purposes, it has been decided 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 six months.”
Everyone from Visa, MasterCard, Google, Paytm and others will have to comply with the central bank’s new rules. This directive is on par with data storage and oversight rules followed in other Asian countries like China, Japan, Malaysia among others. It must be noted that the RBI’s directive only requires data from Indian consumers be stored locally it doesn’t explicitly mention that a mirror of this data can’t be stored abroad. So, in theory, a company like Visa could store all transaction data in India while storing a mirror of the same in the United States or Europe.
Digital payments in India
The digital payments space in India has seen major growth over the last few years and has seen the entry of global tech giants like Google and the Facebook-owned Whatsapp into this space. There were 171.4 million UPI transactions made in the month of February, with Rs 19,126 crore being transacted in total. BHIM processed 5.8% of all UPI transactions. PhonePe accounted for 16% of all UPI transactions, whereas Paytm responsible for 40% of all UPI transactions. We can speculate that a major portion of the remaining 38% was driven by Google Tez and new entrant Whatsapp payments.
Additionally, according to data from the RBI, in January 2018, Rs 40,761 crore were transacted through debit cards and Rs 41,437 was transacted through credit cards. The data also revealed that the number of debit cards in the country stood at to 846.7 million, while a total of 36.24 million credit cards were in operation.
A detailed report on Digital Payments in India was published by Medianama. It can be downloaded here.