Communist Party of India MP Binoy Viswam on Thursday petitioned the Supreme Court, seeking the Reserve Bank of India to frame necessary regulations to make sure that Indians’ data collected on UPI platforms is not exploited by companies like Amazon, Google, and Facebook. Viswam also prayed that Indians’ right to privacy should be protected from being misused by “giant corporations” for their “financial ends”, according to a press statement. Bar and Bench first reported this.
“The Data Protection Act is not yet passed and it is in the form of a Bill. In the interregnum period, the rights of privacy of the Indian Citizens, especially the financial data, have to be protected by the Hon’ble Supreme Court,” the statement added. The petition, filed through Supreme Court advocate Sriram Parakkat, also sought that the National Payments Corporation of India (NPCI), which owns and operates the UPI platform, make sure that data collected by UPI apps operated by these companies not be shared with their parent company or any other third party under any circumstances.
Amazon Pay, Google Pay, and WhatsApp Pay, are all based on the UPI architecture. According to a press release shared by Parakkat with MediaNama, the petition claimed that RBI and NPCI have “permitted the three members of ‘Big Four Tech Giants’ i.e. Amazon, Google and Facebook/WhatsApp (Beta phase) to participate in the UPI ecosystem without much scrutiny and inspite of blatant violations of UPI Guidelines and RBI Regulations”. “This conduct of the RBI and the NPCI puts the sensitive financial data of Indian users at huge risks, especially when these entities have been continuously accused of abusing dominance, and compromising data, among other things,” Viswam’s petition said, as per Bar and Bench.
In April, 2018, RBI had issued a circular directing all payments system operators to ensure that Indians’ financial data is stored within India itself. “However since the systems providers especially WhatsApp and Google Pay failed to follow the deadline of October 2018, and therefore the RBI in order to help the WhatsApp, Google Pay etc, and in complete disregard to the security of financial data of Indian users toned down the April 2018 Circular by issuing Frequently Asked Questions (FAQs) [in June 2019] and permitted the processing of all payment transaction abroad (including domestic transactions),” the petition alleged per the press release.
Viswam argued that the FAQs issued by RBI were illegal, and therefore all payments platforms are required to comply with the central bank’s April 2018 circular in letter and spirit. His petition has also challenged the validity of the FAQ’s issued by RBI. Incidentally, a similar argument was made in a separate petition which sought to stop WhatsApp Pay’s roll out in India. The petition singled out WhatsApp in particular claiming that it was yet to comply with the data localisation norms, according to Bar and Bench. However, it is worth noting that as per RBI, WhatsApp Pay has complied with the mandate (more on that below).
WhatsApp Pay’s troubles in India
WhatsApp Pay, in particular, has run into a number of troubles before its full launch on India, after being piloted over two years ago in India. Facebook and WhatsApp have run into hurdles around India’s data localisation mandate and the related regulatory clearances. At least two different cases, apart from Viswam’s petition, have been filed in the Supreme Court against the service.
In February, WhatsApp had secured a licence to operate from the National Payments Corporation of India (NPCI), after securing the RBI’s approval. However, soon after that, an interim application in the Supreme Court challenged the NPCI and RBI’s green-lighting of the service, calling for the “unlawful trials” of the payments service to stop.
Following that, another petition in the Supreme Court, filed by think tank G2 Chambers, argued that WhatsApp “has been known to have failed to secure sensitive data of its users” and has also “failed to assume accountability and responsibility for the same”, and called for WhatsApp Pay’s trials in India to stop. In an affidavit, WhatsApp questioned the credentials and suitability of the petitioner, calling it a “busybody” that, as an “unregistered Think Tank” was just seeking “to create new barriers for WhatsApp Pay under the guise of enforcing fundamental rights”.
In August, RBI informed the Supreme Court that NPCI had given ICICI Bank, WhatsApp Pay’s payment service provider (PSP), the approval to go live on June 5, 2020 since the platform had complied with the data localisation requirements that had held up its full scale launch.