By Elton Gomes
Citing concerns over India’s data localization rule, Apple has stalled plans to launch a Unified Payments Interface-based platform in India. Apple has shelved plans to introduce Apple Pay in India despite discussions with a few leading banks and the National Payments Corporation of India (NPCI), which manages the UPI platform, two people familiar with the matter said.
Apart from the data localization rule, the company also ran into technical and design hurdles that may have affected the flow of payments, the two people said. “Apple will not launch payments in India yet. They are waiting to see how the regulatory landscape shapes up,” the Economic Times reported.
Talking about the design hurdles, a banker told the Economic Times that Apple wanted fingerprint as a mode of authentication for UPI payments, which did not comply with NPCI guidelines. The banker said, “NPCI has prescribed that transactions can be authenticated by biometrics only when they get validated by UIDAI.” The Economic Times further reported that NPCI does not permit biometrics collected by external devices as a mode of authentication. To authenticate transactions, UPI requires customers to enter a six or four-digit number.
The RBI’s data localization rule
In April, the RBI asked all payment companies operating in India to set up facilities for data storage within the country in the next six months. In its notification, the apex bank said since the payments ecosystem had grown in India, the bank needed “unfettered supervisory access” to the transaction data in order to ensure that the network is better monitored. Several sections of the industry argued that the six-month deadline was too short to comply with.
The RBI’s announcement raised several concerns among leading Indo-US business advocacy groups. These groups opined that restricting data flow across borders could jeopardize a country’s global competitiveness and economic growth, adding that the data localization rule might not necessarily mean that data remains protected.
Although the finance ministry suggested relaxing the data localization rule, it has continued to be a major bone of contention for many multinational companies including Mastercard, Visa, Amazon, WhatsApp, and PayPal to launch a UPI-based payment platform in India.
Amazon, WhatsApp face similar roadblocks
WhatsApp’s plans to start an integrated payments scheme hit a roadblock after the Indian government told the company that it cannot roll out the service until it sets up an office and has a team based in India. WhatsApp responded by saying that it is looking to hire two senior profiles – India Head and Head of Policy and that setting up a team in India has become a priority for them. The Ministry of Electronics and Information Technology had asked WhatsApp and its partners to give out all details about the payments system.
Amazon faced similar hurdles after it shelved plans to launch its own payments services due to concerns over data storage. Amazon employed Axis Bank to start issuing UPI handles to users of Amazon Pay, sources said.
Will Apple Pay be feasible in India?
Apple Pay’s hurdles in entering India might not be good news for its loyal fans, particularly since the company has been making some efforts to increase its visibility in the Indian market. However, it remains to be seen whether anyone would even use Apple Pay, given that Android dominates a large portion of the Indian market.
In addition, Apple’s phones are rarely preferred in a cost-conscious market like India. This could mean that Apple might not have many users using its services unless it takes drastic decisions to lower its prices. Considering the presence of local players like Paytm and RuPay, Apple Pay might have a tough time in the Indian market and will have to invest heavily to establish a large network of stores to support its payment mechanism.
Elton Gomes is a staff writer at Qrius
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