In a blog post, PhonePe has alleged that international payment companies like Google and WhatsApp are trying to evade taxes by having data servers abroad (and not in India). It added that for this reason, these companies are reluctant to have local data servers in India. In April, the RBI mandated that all payments system operators operating in India had to ensure that payment systems data be stored in the country within 6 months. The move would have come into effect from October 15 this year. PhonePe went on to say, “We believe Google needs to clarify its stand more crisply. Is Google confirming that it will process and store all payment transactions related data only within Indian boundaries?” Google operates a competing service called Google Pay in India. Interestingly, Google said that it would abide by the RBI's directive, but also asked for a 2 month extension. The following is PhonePe's argument for data localisation: No policy contradiction in FDI and local data storage PhonePe says that FDI is "important for rapidly scaling the Indian fintech sector. PhonePe itself is majority-owned by a foreign company today." However, it also adds that, "We see no policy contradiction in terms of India having a liberal FDI policy, and having a strong data localization policy. Both policies can and should co-exist. FDI helps grow the market faster and allows foreign investors to participate in this growth, while data localization aims to protect the interests of our consumers." Why digital payments should be stored and…
