Seems like you have to wait longer for WhatsApp Payments
What's the story
WhatsApp's Payments service has hit yet another hurdle in India - now, the government has reportedly told WhatsApp that it can't roll out the service till it sets up an office and recruits a team in India.
The government also plans to consult the Reserve Bank of India (RBI) on whether remotely-controlled payment solutions breach rules governing setting up of financial services in India.
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The government doesn't have much confidence in WhatsApp
"They don't have an office here, they don't have a team, payment is a very critical activity, and they are not involved in payments in any other country, so it doesn't give us confidence," said a senior Ministry of Electronics and Information Technology (MeitY) official.
Response
Setting up India team is reportedly a "priority" for WhatsApp
As reported by the Economic Times, the government's decision was conveyed to WhatsApp COO Matt Idema met MeitY officials last week.
Responding to the government's decision, WhatsApp reportedly said that it is looking to set up an India team on a "priority" basis, and is actively looking to recruit people for the posts of 'India Head' and 'Head of Policy'.
Data privacy
There are also major concerns about user data privacy
The latest hurdle comes as another frustration for WhatsApp, which has been testing its Unified Payments Interface (UPI)-based payments service in India for several months now.
Notably, WhatsApp could face further delays in launching Payments owing to concerns regarding user data privacy.
The Ministry of Electronics and Information Technology (MeitY) has sought more details about WhatsApp's payments service in this regard.
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Why contracts between WhatsApp and banks could be risky
A government official told ET that contracts between banks and WhatsApp would be "risky, since they allow for arbitration and data transfer in foreign countries." The official added, "The only point is we don't want to create loopholes....when you are dealing with millions of people."
Allegations
Several, including Paytm, alleged that WhatsApp flouted norms
The concerns about privacy and security come after several players in the digital payments industry, including the likes of Paytm, alleged that WhatsApp was flouting norms to roll out its payments feature.
MeitY has already asked the National Payments Corporation of India (NPCI) to conduct a probe into whether WhatsApp Payments conforms to RBI rules and ensures data security of customers.
Larger picture
RBI's clarification on remotely-controlled payments services will be crucial
Currently, several companies like Google and Truecaller can remotely act as intermediaries for facilitating payments without the requirement of having even one person in India.
With the government seeking a clarification from the RBI about rules governing remotely-controlled payment facilities, such companies might be facing heat in the near future if the RBI decides that the current practice is undesirable.