WhatsApp’s payments system: Supreme Court seeks replies from finance ministry, NPCI, RBI

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Published: May 14, 2020 12:01:19 AM

The Facebook-owned messaging application is reportedly launching its payments option in partnership with three private banks in India soon.

Seeking a ban on WhatsApp Pay, senior counsel Krishnan Venugopal, appearing for GGC, argued that the instant messaging app should be punished for “breaches and non-compliance”.Seeking a ban on WhatsApp Pay, senior counsel Krishnan Venugopal, appearing for GGC, argued that the instant messaging app should be punished for “breaches and non-compliance”.

Agreeing to hear a PIL seeking a ban on WhatsApp’s payments system in India, the Supreme Court on Wednesday sought response from the finance ministry, National Payment Corporation of India (NPCI), the RBI and others as to why the instant messaging service should not be punished for breaches and flagrant violations of regulatory norms and also asked to comply with all regulations before the final launch of its payment getaway.

A bench led by Chief Justice SA Bobde issued notice to WhatsApp, its parent Facebook, the RBI, NPCI, ICICI Bank and the ministries of finance, electronics & information, law & justice and home affairs.

However, the apex court said that the pendency of the PIL will not come in the way of the RBI granting approval to WhatsApp over its payments system, called WhatsApp Pay. “It is made clear that there will be no stay of the proceedings with respect to the application of Whats App by the Government, which shall be processed in accordance with law,” the SC said in its brief order.

It also tagged the PIL filed by Good Governance Chambers (GGC), a think tank, with another pending plea that raises the issue of WhatsApp’s compliance with data localisation norms and data encryption.

Senior counsel Kapil Sibal, appearing for WhatsApp, also undertook that the Facebook-owned messaging application will “not go ahead with the payments’ scheme without complying with all the regulations in force”.

The Facebook-owned messaging application is reportedly launching its payments option in partnership with three private banks in India soon.

Raising security and privacy issues, the petition by GGC said WhatsApp was given a beta licence in February 2018 for launching a “dedicated application” for UPI transactions. However, instead of developing a separate and “dedicated application”, WhatsApp embedded in its messaging service the UPI transactions features. This, the plea states, is “blatant and wilful violation” of mandatory guidelines and regulatory norms that form the very fundamentals of the Unified Payment Interface (UPI) system, thus posing a serious threat to the monetary policy of the country.

Moreover, the combining of two services on the same app involves several complications wherein sensitive data of the user is put to high risk, it argued.

“Despite claiming to have a secured and safe technology Interface and infrastructure, WhatApp has been known to have paid to secure sensitive data of its users and subsequently even failed to assume accountability and responsibility for the same,” the PIL stated, adding that alleged violations by WhatsApp, with its reach of over 400 million active users in India, could pose a threat to security and privacy of crores of users.

Besides, GGC argued that WhatsApp has violated various other regulatory norms governing securing of user financial data, data localisation, two-factor authentication, processes, system for lodging compliants and de-registration of a UPI linked account.

Seeking a ban on WhatsApp Pay, senior counsel Krishnan Venugopal, appearing for GGC, argued that the instant messaging app should be punished for “breaches and non-compliance”.

Flaying the conduct of the RBI and the NPCI, the think tank also alleged that instead of being punished, the NPCI and RBI have been giving preferential treatment to WhatsApp by granting permissions to carry out its activities and expand its user base to 10 million in complete disregard and contravention of the public policy and welfare of citizens of India.

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