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Google Pay under legal cloud

Google claimed its payment service operates as a technology service provider to its partner banks, to allow for payments through the UPI infrastructure, and is not part of payment processing.

Apr 11, 2019 by The Passage Team
Google Pay under legal cloud

A division bench of the Delhi High Court issued notice to the Reserve Bank of India and Google India Digital Services Private Limited seeking explanation on the alleged unauthorised operation of Google Pay in the country.

The PIL, filed by Abhijit Mishra, accused Google Pay of not being a certified authority under the Payments and Settlement Systems Act, 2007 to enable money transactions in India. Google does not figure in the list of authorised “payment service operators” released by the central bank in March, the PIL noted.

Google Pay is a digital wallet platform and online payment system developed by Google to power in-app and tap-to-pay purchases on mobile devices.

Google responded with an official statement claiming its payment service, “operates as a technology service provider to its partner banks, to allow for payments through the UPI infrastructure, and is not part of payment processing or settlement.

The RBI list includes 82 payment providers but doesn’t cover UPI-based payment services.

“There is no requirement for licensing of these services under the prevailing statutory and regulatory provisions,” the company stated.

Google Pay uses Unified Payments Interface (UPI) to facilitate transactions directly between bank accounts. The payment arm, launched in 2017, has partnerships with Axis Bank, ICICI Bank, State Bank of India and HDFC.

The petitioner in his plea said he is concerned with the welfare of Indian economic and banking system in the view of the privacy of Indian citizens. The payment application has 45 million monthly active users, Google claimed.

“In order to support our partner banks, our efforts in complying with the government's data localisation norms are underway, and given the scale and complexity, we are being mindful to prioritise data security and uninterrupted services to our users as we make this transition,” Google's statement read.

“The central bank is apprised of the progress and we remain committed to complying with the laws of the land,” Google stated.

According to investment bank Credit Suisse, the digital payment industry is pegged to become a USD 1 trillion industry by 2023, reported ET.

Last month, RBI submitted an affidavit in the Supreme Court accusing WhatsApp Pay of failing to comply with data localisation requirements.

Since February last year, WhatsApp has been running a beta version of WhatsApp pay for a limited number of users (one million) as it's yet to comply with regulations including storing data locally and setting up a physical office.

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