US-based payment firms Visa, Mastercard and American Express, among others, pushed India to consider diluting rules on data storage, but their lobbying campaign has sparked a spat pitting them against local rival Paytm, Reuters reported.
Reserve Bank of India in April directed payment firms to store data locally for “unfettered supervisory access. Payment companies such as Visa, Mastercard and American Express fear it would cost millions of dollars and hamper global fraud detection.
The rules give a competitive advantage to Paytm, backed by Japan’s Softbank Group and China’s Alibaba, which already stores its data in India. The company has publicly supported the proposal and, behind closed doors, tried to thwart efforts of those opposing them, the report said.
Paytm argued with foreign company executives on the benefits of storing data locally and said the rules were in the national interest in a meeting between officials and industry representatives in June, chaired by India’s economic affairs secretary SC Garg. Garg told Paytm not to bring the national interest into a debate around data storage.
Paytm in May privately objected to lobby group Payments Council of India (PCI), which wanted to tell the central bank that “most” of its members had concerns with the proposal.
Paytm’s spokeswoman Sonia Dhawan said: “All the data related to the Indian users must be stored and processed only in the country for the benefit of the country and to uphold the need for data privacy.”
The tussle between Paytm and other companies highlights the competition that has gripped India’s crowded digital payments market which, according to Boston Consulting Group and Google, is expected to grow tenfold to $500 billion by 2020.
Paytm, with its mobile wallet app, has cashed in on the boom by partnering with Indian merchants for payments, eroding dominance of card firms such as Mastercard and Visa.
Indians in May clocked transactions worth $52 billion using their 964 million credit and debit cards, nearly double the amount recorded back in November 2016. Monthly mobile-wallet payments have risen nearly 5-fold to $2 billion during the period, data from the Reserve Bank of India (RBI) showed.
India’s digital boom has prompted Facebook’s WhatsApp messenger to test an interbank money transfer service in India, while Google also launched a payments app last year to compete with local players.