SC seeks WhatsApp Pay response to PIL alleging breach of regulations

The Supreme Court on Wednesday agreed to hear a public interest litigation seeking a ban on WhatsApp Pay, and alleging that it violates the mandatory guidelines and regulatory norms of the unified payment interface. 

WhatsApp Pay is the UPI-based payments system of Facebook-owned messaging app WhatsApp, embedded within the app itself. The petitioner in the case is an NGO called Good Governance Chambers. 

The petition, a copy of which has been seen by Business Standard, alleges that WhatsApp has "consistently defaulted" in complying with the directives issued by the Reserve Bank of India and tha National Payments Corporation of India. 

The petitioner further said that the present model of WhatsApp Pay "wherein two services are are embedded in one app is at high risk and highly volatile model to be permitted to operate UPI enable(d) payments".

WhatsApp Pay is different from other apps that offer this payment capability, because it does not require two levels of authentication like other apps. It is available within a chat window to about 1 million of the over 400 million users of WhatsApp in India as part of a trial run. UPI, developed by NPCI, lets bank account holders send or receive money electronically without entering their net banking user ID or password.  

The court has sought a reply from WhatsApp, its parent Facebook, the Reserve Bank of India (RBI), National Payments Corporation of India (NPCI) and the union government within three weeks. The Court further said that the government can process applications filed by WhatsApp in the meantime and there is no stay on the those actions. 

The petitioner has further said that WhatsApp has violated several other regulatory norms including securing financial data, data localisation, two-factor authentication and system for lodging complaints.

WhatsApp has assured the Court that it will not begin operations until it gets a go ahead from the RBI. 

So far, Google Pay (launched in 2017 as Tez) has been the most used and growing UPI app in India, followed by PhonePe, Paytm and NPCI-created BHIM.  All or most of these apps have either acquired users from the ground up, giving banks time and opportunity to scale up as the transaction volume rises.

WhatsApp, the user base, is already huge and it has been hinted that a phased rollout will likely ensure banks can scale up their systems as users start transacting. Payments through WhatsApp were introduced to a million users as a part of trial run in February 2018.

In an earlier petition filed before the Supreme Court by think tank Centre for Accountability and Systemic Change (CASC), it was said that WhatsApp was not fully compliant with the norms prescribed in India for launching payment services.

The petitioner in that case had asked for the appointment of a grievance officer for WhatsApp based in India and alleged that WhatsApp had launched its payment services without having fully complied with RBI’s directives on data localisation.