Amazon’s UPI-based payment service

Amazon’s UPI-based payment service

Ecommerce major Amazon’s plan to launch its own UPI payment service in the country is stuck due to concerns around the storage of data within India, said two bankers in the know of the matter.

The online retail giant is the second US tech firm, after Facebook-owned messaging app WhatsApp, whose plan to offer Unified Payments Interface (UPI)-based service has been delayed.

Multinationals keen on entering payments space in India through inter-bank fund transfer railroad UPI are now waiting for more clarity on data storage from the Reserve Bank of India, the two bankers told ET on condition of anonymity. “Both WhatsApp Payments and Amazon Pay have not gone live due to similar reasons,” one of them said. “Now with the draft Personal Data Protection Bill also being put out for consultations, these players have to wait for the final decision.”

Amazon has roped in Axis Bank to start issuing UPI handles to users of Amazon Pay, sources said. Amazon earlier this year introduced UPI as a mode of payment on its website. “We are excited about UPI as it democratises the payments experience for banked customers by simplifying mobile payments across more than 50 banks and powering use cases like money transfers,” an Amazon spokesperson said in a written reply to ET.

The company, however, did not comment on the Axis Bank partnership or its plans on data localisation.

In April this year, RBI had said all payments data should be made to reside within India only and gave companies six months to comply, in amove that could affect companies such as Visa, American Express and Mastercard that operate in the card payments segment besides firms working in the UPI space.

While financial data need to be stored in India, what companies are trying to understand is whether they will be allowed to keep a copy of data outside the country.

Recently, the finance ministry came out with a note shared with the RBI saying data mirroring should be allowed, which means that companies need to store a copy of the data in India while another can be kept outside the country. However, RBI is yet to come out with a clarification circular to settle the issue.

“Till that happens the limbo will continue,” said one of the bankers. Last week, the Srikrishna Committee on data privacy and protection submitted recommendations along with a draft personal data protection bill, which also said critical personal data can only be stored in servers located in the country.

Amazon has been attempting to play a larger role in the payment space in the country and had last year secured a wallet licence from the banking regulator. Unlike its American operations, Amazon not only sells goods in India but also offers discounts on mobile recharge and bill payments to increase adoption of its payments services.

“Amazon Pay, just like other wallet companies, was first affected when the RBI issued the compulsory KYC (know your customer) guidelines for wallet users,” said a senior executive of a payments company.

“UPI was its bid to capture a larger role in the digital payments space…Even that seems to have been stuck now,” the person said.

UPI has been growing by leaps and bounds in the country as more peer-to-peer transactions and some bit of online merchant payments are moving over to the National Payments Corporation (NPCI)-managed payment mode.

Players such as Alibaba and Softbank-backed Paytm, Flipkart-owned PhonePe and Google Tez are competing for a larger share of the UPI payments space and are trying out new use cases on their apps.

As per figures released by NPCI, there were 235 million UPI transactions involving Rs 45,845 crore as of July.

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