Whatsapp, owned by social media giant Facebook, won’t be able to launch its much-awaited payment service until the Reserve Bank of India (RBI) gives it the go-ahead.
Whatsapp Pay, the messaging platform’s payments arm, was expected to launch by the end of May with its already established user base of about one million. This number is part of Whatsapp Pay’s trial run phase and the service would eventually be made available to its entire user base of more than 400 million in India.
The spanner in the works came about when a not-for-profit organisation called Good Governance Chambers filed a public interest litigation seeking a ban on WhatsApp Pay. It comes at a time where Whatsapp Pay was looking to benefit from the recent investment by its parent company Facebook in India's largest mobile service operator Reliance Jio.
What makes Whatsapp Pay different?
The NGO, in its petition has alleged that Whatsapp violates the mandatory guidelines and regulatory norms of the unified payment interface, UPI.
The Supreme Court on Wednesday agreed to hear the public interest litigation seeking a ban on WhatsApp Pay. The petition alleges that WhatsApp has ‘consistently defaulted’ in complying with the directives issued by the RBI and the National Payments Corporation of India.
The petitioner said the present model of Whatsapp Pay is "at high risk and highly volatile" because two services are embedded in a single app and such a process should not be permitted to deploy UPI payments.
Another major shortcoming is that while other applications with UPI payments facility has two levels of authentication in place, Whatsapp Pay does not, rendering it insecure for transactions.
Neither safe nor secure
Moreover, the NGO pointed out that Whatsapp does not have a secure and safe technological interface for securing sensitive user data.
In a nutshell, regulatory norms such as those pertaining to securing financial data, data localisation, two-factor authentication, and a system for lodging complaints are all in violation as per the petition.
The apex court has sought a reply from WhatsApp, its parent Facebook, Reserve Bank of India, National Payments Corporation of India (NPCI), and the union government within three weeks.
The government can process applications filed by WhatsApp in the interim, while Whatsapp has assured the Supreme Court that it will wait for the Reserve Bank of India, RBI to give its assent before commencing its operations.
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