NEW DELHI: No payment service till you set up an office and recruit a team in India, that’s what the government has told Facebook-owned WhatsApp. The government also plans to seek Reserve Bank of India’s views on whether payment solutions controlled remotely violate rules on setting up such financial services in India.
The impact of these interventions will further delay the launch of WhatsApp’s payments service.
ET has learnt that the government conveyed this message earlier this month when a WhatsApp team of executives led by chief operating officer Matt Idema had met officials from the ministry of electronics and IT (MeitY).
WhatsApp has been testing its payments service on Unified Payment Interface (UPI) for several months now and is close to reaching the permitted number of one million users.
WhatsApp told ET in emailed responses that setting up an India team is a “priority” and that it is currently headhunting for two leadership positions, India Head and Head of Policy. The government appears firm on making physical presence in India, one of the key conditions for WhatsApp’s payment plans. “Our point to them was you want to start payments service for 220 million people but you cannot do it by remote control,” a senior official from MeitY told ET.
“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,” added the official. Officials who spoke for this story did not wish to be identified.
Earlier, MeitY had expressed other concerns over WhatsApp’s payments service — that its pilot was not following the two-factor authentication, that the service shares data with parent Facebook, and about its data storage policies.
MeitY letters were sent to the National Payments Corporation of India (NPCI) with a copy to the banking regulator Reserve Bank of India.
“RBI has clear guidelines that you should be having a presence here, either through a branch or a fully-owned subsidiary, without that you cannot do business in India… Payment is not independent of banking.
Today, all intermediaries including Google, WhatsApp or Truecaller can do payment without having one guy or one office in India, something tells me that this is a contradiction, so we have to clarify it (with RBI),” the official added.
A WhatsApp spokesperson told ET in an email response that to support its users in India and continue its investment in the country, the top priority of the company is to hire local leaders who can help build a team on the ground.
The official quoted above said that as far as payments are concerned, the question is “who will be accountable if there is a dispute on payments”.
“WhatsApp will simply say my commercial dealing is with a bank, they are using my app, and we are not in your jurisdiction at all,” the official said.
The government official also said RBI’s views will be sought since contracts between WhatsApp and banks are “risky, since they allow for arbitration and data transfer in foreign countries.” He added, “We are not against WhatsApp, the only point is we don’t want to create loopholes in a service when you are dealing with millions of people.”
During the meeting with Idema-led WhatsApp team, the issue of fake news and rumours circulating on the messaging platform was also discussed, the officials said. The government has strongly criticised the messaging service over fake news. The company has since launched a ‘forwards label’ to mark non-original content, and limited mass forwarding of messages to five at one go.