RBI Makes It Tough For Digital India – All Payment Companies, Wallets Should Store Data In India!
Digital transactions have crossed the $2 trillion mark and reports indicate that not only wallets and cards, but UPI too is experiencing record growth of usage.
We had been reporting about the meteoric rise of digital payments in India, as a wave of Digital India ideas and efforts inspired people to be cashless.
While official reports showcased how digital transactions have crossed the $2 trillion mark, reports indicated that not only wallets and cards, but UPI too is experiencing record growth of usage. Both in terms of volume and amount.
However, just like RBI’s mandatory KYC rule for wallets threatened to derail this magnificent growth, another RBI rule released a few days back is endangering entire digital payments ecosystem.
The question is: Will this even work?
RBI: All Payment Companies Should Store Data In India!
As part of their Policy Review meetings, Reserve Bank of India has asked all payment firms, payment companies, wallets and any provider of digital payments to store their data locally.
They have 6 months to comply with this new rule.
In their circular, RBI said,
“In order to have unfettered access to all payment data for supervisory purposes, it has been decided that all payment system operators will ensure that data related to payment systems operated by them are stored only inside the country within a period of six months.”
They ‘observed’ that only few payment companies are actually storing the data locally.
Hence, companies like Visa, MasterCard, Google, Paytm etc will have to now make arrangements to store their transaction data inside India.
RBI has stated this new rule is, actually, following similar mandates in Asian countries like China, Malaysia and others.
No doubt this RBI mandate will help to generate more jobs in India; but, a very strong loophole in this mandatory rule makes it actually illogical.
Will RBI’s New Rule Even Work?
As pointed out by Medianama, RBI has asked all payment companies to store their data locally but hasn’t stated any condition which makes it illegal to mirror the same data outside India.
Hence, say if Visa makes arrangements to store their transactions data inside India, they can also mirror the same database and store it outside India as well.
If that happens, then the whole logic of ‘protecting’ data of users in India falls apart.
Locally, payment companies will just need to create a new database, and things will go as usual.
International analysts and researchers have predicted that 80% of all payments in India will become digital by 2025. But if RBI makes such mandatory rules, like data should be stored locally, then it can create some major obstacles.
Do you think RBI has made the right decision? Do let us know by commenting right here!