Visa has also submitted a status update to RBI, including a plan on how it will tweak its existing global processing systems to fully comply with the requirement to store data only in India, the company’s chief executive officer told analysts during a call on October 24. The company did not disclose timelines for the complete shift. “As of October 15, we are storing data locally, where we can also facilitate RBI’s requirement of access to Indian cardholder payment transaction data,” Visa CEO Alfred Francis Kelly told analysts.
While Visa has been retaining data of Indian users locally from the day of the RBI deadline, it continues to process the data outside the country. Visa and RBI did not respond to emails seeking clarity. India had over 1 billion debit and credit cards as of August 2018, according to RBI. Nearly 98% are debit cards issued by Visa, Master-Card and local player RuPay. Around 40 million credit cards are in circulation in the country.
Analysts are of the view that while India has maintained a firm stand on data localisation, there could be challenges in handling the complexities of moving data located in overseas servers to India.
“The direction from regulators and the government is clear and firm, but at the same time such transitions are fraught with complexity as country-specific data and systems would need to be untangled from their current overseas ecosystems,” said Vivek Belgavi, partner, PwC.
Visa and MasterCard were at the forefront of the opposition to RBI’s data localisation move and aggressively lobbied through trade bodies such as the USIndia Business Council. They were joined by firms such as Google, Facebook and PayPal in requesting government intervention at multiple levels including during meetings with finance minister Arun Jaitley.
The global companies had also sought extension of the October 15 deadline and watering-down of the mandate to allow data mirroring, or storing a copy in India and processing the data outside the country. RBI, however, stuck to its stance. Local firms such as Paytm and PhonePe have maintained that user data should be stored locally. Facebook-owned WhatsApp has since said it has systems for data localisation without clarifying whether it would keep only a copy of the data in India or if it would store data exclusively here. The firm’s payments service licence is pending approval.
“We would see some pain the short term, but in medium to long term, local data processing options would flourish,” PwC’s Belgavi said. During the call with analysts, Visa’s Kelly spoke about his bullishness about the Indian market despite increased competition and regulatory challenges. “If you look at India as one case study, that’s a market we’ve been in for 35 years. We’ve got a big team on the ground there. And we continue to be the market leader even though there’s lots of activity going on there in terms of both government intervention, as you talk about, as well as new players that are emerging,” he said.
The National Payments Corporation of India-run RuPay has emerged the second-largest debit card issuer in the country. There is also the Unified Payments Interface (UPI) — the peer-to-peer mobile payments system that uses the country’s banking network for micro payments. Several companies such as Google, Truecaller, Paytm and PhonePe offer payments services using the UPI platform. Kelly said international payments volumes in constant dollars grew 11%. “…acceleration in India and southern Europe was offset by slower growth in the United Kingdom and Australia,” he added.
(This story has been sourced from a syndicated feed and was originally published on The Economic Times.)