Facebook-Jio deal may see more foreign e-commerce firms flock to India

WhatsApp's integration into Jio's e-com platform holds the key: Experts

Some recent regulatory developments may have precipitated the Facebook-Jio deal. Going forward, this may increasingly prompt foreign e-commerce operators to consider setting up base in India, say legal and tax experts.

Pressure from the recently-expanded scope of Equalisation Levy that covers non-resident e-commerce platforms, the Reserve Bank of India’s (RBI’s) mandate that all data related to payments should be stored only in Indian systems, besides the rigours of an imminent Data Protection Law have played their part in shaping the Facebook-Jio deal, noted Tarun Jain, partner, BMR Legal.

The deal may not throw up any major tax issues, other than tax complexities associated with e-commerce business, said Abhishek Rastogi, partner at Khaitan & Co. The expanded scope of Equalisation Levy, as per the Finance Act 2020, is unlikely to influence the deal since most Jio platforms are likely to qualify as Indian e-commerce operator.

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“It will, however, be interesting to watch the manner in which WhatsApp is integrated with these platforms and facilitates online transactions,” said Lokesh Shah, partner, L&L Partners.

Given the wide scope of Equalisation Levy, which also includes a facilitator such as WhatsApp service, the applicability will need to be examined based on the actual role of WhatsApp/ Facebook, Shah added.

Experts, however, point out that becoming an Indian tax resident could turn out to be a double-edged sword for foreign e-commerce players as it would expose the global income of such operators to tax in India.

WhatsApp Pay set for phased roll out in India; granted NPCI licence

As per licencing terms, the company can offer WhatsApp Pay to ten million users in India in this phase and do a full rollout after meeting all other compliance points.

In a major development, WhatsApp will be able to roll out its digital payment platform, WhatsApp Pay, across India after securing a key regulatory approval on Thursday.

“The National Payments Corporation of India (NPCI) has granted WhatsApp a licence to operate its digital payment service in a phased manner,” a Reserve Bank of India (RBI) executive told Business Standard on Friday. The official didn’t want to be quoted.

The NPCI’s approval came days after the RBI’s go-ahead. WhatsApp has assured the regulators that it will comply with the data localisation norms – a key factor behind the delay of the WhatsApp’s payment service launch.

In the first phase, WhatsApp will be able to offer payment services to 10 million users in India. “Pending other compliance points, the messaging platform will be able to do a full rollout,” the source said.

Once the company is able to do a full rollout, it will possibly be one of the biggest payments players in the country, given that the messaging service giant counts India as its biggest market with over 400 million users.

Payments through WhatsApp were introduced to a million users as a part of trial run in February 2018. WhatsApp started its trial run by partnering with ICICI Bank. However, the company was awaiting regulatory nod to go live. The service is based on the Unified Payments Interface (UPI) standard, which has been developed by the NPCI.

The move would put the Menlo Park, California-based social media giant in direct competition with players like Alphabet’s Google Pay, Walmart-owned PhonePe, Amazon Pay and Alibaba-backed Paytm. These companies are already locked in a fierce battle to dominate the digital payments space in India.

Google Pay sharing payments data with group firms, third parties: Paytm

This is not the first time Paytm has called out an international firm over data and payments issues.

Vijay Shekhar Sharma-owned fintech major Paytm has alleged that payments platform Google Pay is violating guidelines by sharing data with its group companies and third parties, and also using it for advertising purposes.

Google Pay’s privacy policy states it collects, stores, uses, and discloses users’ personal data for advertising and promotional purposes, Paytm claims in its letter to National Payments Corporation of India (NPCI).

“We would like to highlight a very important fact that Google Pay, which is an un-regulated payments platform, has the scope of using their customers’ data for their monetary gains with complete disregard of the user’s need for privacy. The critical payments data collected by them is being processed and stored outside of India, which can have severe security implications in case of a data breach as their policy states that this data is also being disclosed with advertisers and third-parties,” reads the company’s letter.

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One97 Communications, the company that owns Paytm, said on several occasions it stored as well as processes user data onshore. “India is in the process of drafting its personal data protection bill. Against this backdrop, it is of utmost concern that global companies are sharing Indian users’ personal data among group companies,” the company wrote in the email.

In a statement, Google refuted the charges, saying its payments users have a direct relationship with the firm. According to Google Pay terms of service, a Google account is opened with Google LLC. “A common Google Account allows for checks and controls required for managing risk, fraud, spam, and for enhancing security measures that are applied across Google products... Google does not use any individual UPI transactions data for any monetisation purpose,” its spokesperson said.

It added that Google Pay shares user data as may be required for the purpose of processing transactions or providing Google Pay Services with our authorised partners.

Article Source Business Standard

Apple shelving UPI shows how foreign giants trip over Indian regulations

The first of the issues is the data localisation recommended by RBI; then there are Justice Srikrishna panel's draft privacy Bill, health ministry guidelines, and even the national e-commerce policy.

It is an oft-repeated, well known story, only the actors keep changing. For more than a year, Facebook-owned instant messaging giant WhatsApp has been looking to foray into India’s thriving digital payments industry but has moved little beyond a beta launch. Now, it is the $1-trillion US tech giant Apple that cannot find it in itself to launch a proprietary payments product using the country’s flagship Unified Payments Interface (UPI), suggest reports.

Apple’s move to shelve its UPI plan comes at a time when Google has placed massive bets on the Indian payments ecosystem, especially with its Google Tez app, recently rebranded to Google Pay, which allows people to pay, collect and request payments using UPI. However, Google isn’t too sure of its own future, either. The company is known to be assessing its plans in India, considering strict data localisation norms.

If the UPI values are rising at a breakneck speed each month – they have eclipsed credit card spends in the country – what could possibly be the reason for the three big giants in India’s digital story remaining largely out of the race? Regulations!

The first of the lot is data localisation as recommended by the Reserve Bank of India. Then there are Justice Srikrishna panel’s draft privacy Bill, guidelines of the health ministry, and even the national e-commerce policy. Data localisation simply means storing specific data related to individuals inside the geographic boundaries of the country. However, to different departments it means different things, and it can get confusing for companies.

For instance, earlier this year, RBI issued its master directions and gave companies six months to move to the country all payments and financial data related to Indian cities. RBI also used the phrase “only in India”, implying none of this data could be taken outside of the country for processing.

India’s payment industry has traditionally depended on giants like Mastercard, Visa and American Express, which brought a plastic money boom to the country. These three companies are known to process data at their master data centres outside India, so setting up new data centres just to satisfy RBI’s conditions did not go down too well with these players....Read More

Article Source BS

WhatsApp to hasten payments services to 200 million Indians

The messaging app will partner HDFC Bank, ICICI Bank and Axis Bank to process the transfers, and State Bank of India will join once it has the necessary systems in place.

Facebook is set to offer its  WhatsApp payment  services to the whole of India as early as next week in an attempt to win market share, even though its partners aren’t all ready, said people familiar with the matter.



The messaging app will partner HDFC Bank, ICICI Bank and Axis Bank to process the transfers, and State Bank of India will join once it has the necessary systems in place, the people said.



Facebook  was aiming for a full rollout with four partners but decided to go ahead with just three as its rivals were racing ahead, the people said, asking not to be named as the information isn’t public.



The entry of Whatsapp into India’s payments space has been likened to WeChat, which reshaped payments in China when it expanded beyond messaging.



The pilot version of WhatsApp Pay — started with 1 million users in February — received rave reviews, threatening the market share of incumbents Google Tez and Alibaba-backed Paytm, which lack the benefits of a social network.



“WhatsApp has a great starting point: a monopoly in chat,” said Vivek Belgavi, leader for financial technology at PwC India. “High engagement makes it a credible competition.”



More than 200 million Indians already use WhatsApp messaging, equivalent to 60 percent of the US population and a daily active usage that Forrester estimates to be about 20 times higher than Paytm’s.




Emails to representatives of WhatsApp, State Bank of India, HDFC Bank, ICICI Bank and Axis Bank weren’t immediately answered.