WhatsApp to SC: Trial run of payment service going on, final launch after due RBI compliance

WhatsApp to SC: Trial run of payment service going on, final launch after due RBI compliance: Instant messaging app WhatsApp today assured the Supreme Court that its payments service in India is currently in trial mode and will launch fully only after compliance with the RBI’s norms, per Bar & Bench. WhatsApp said it’s likely to complete the trial run by the end of July. WhatsApp’s attorney Kapil Sibal said, “We cannot launch the product without compliance.” The apex court was hearing a petition seeking a direction that WhatsApp complies with RBI norms for its payments service. The court has now listed the matter for July, taking note of WhatsApp’s assurance.

Won’t launch payment service without RBI nod: WhatsApp to SC

This development comes just a day after Facebook CEO Mark Zuckerberg reiterated that the company won’t store user data in countries which have a weak law and where governments may get access to it.

A bench of Justices R F Nariman and Vineet Saran was hearing a plea filed by an NGO, Centre for Accountability and Systemic Change (CASC), which has claimed that WhatsApp has not fully complied with RBI’s circular which prescribed data localisation norms.  Senior advocates Kapil Sibal and Arvind Datar, appearing for the messenger app owned by US-based Facebook, told the bench that they are only having a trial run which is likely to be completed by July and it will not launch payments services without fully complying with RBI norms. Sibal said, “We cannot launch the product without complying with the norms.”

Advocate Virag Gupta, appearing for the NGO, said that WhatsApp was allowed to run the trial of its payments services with one million users. Relying on the Reserve Bank of India’s circular of April 6, 2018, he said that trial data of users cannot be allowed to be kept outside India. He further added, “This may be violative of permission granted by National Payment Corporations of India (NPCI) to Whatsapp.”

While Sibal claimed that there was no formal agreement between WhatsApp and NPCI till now, Solicitor General Tushar Mehta, appearing for the Centre, said that WhatsApp was not complying with data localisation norms which is evident from the affidavit filed by the RBI. To this, the bench said that if norms laid down by RBI are not followed by Whatsapp, then it can be prosecuted.

The Delhi-based organization, the Centre for Accountability and Systemic Change, had petitioned the Supreme Court about WhatsApp’s failure to comply with Indian laws, including its failure to appoint a grievance officer. It stated that WhatsApp is a foreign company with over 200 million users, but without any servers or offices in India. It further says that having an office and a grievance officer for users is necessary under Indian law.

Further reasons that the petition seeks compliance for are:

  1. WhatsApp is not co-operating with Indian intelligence agencies in their probe on terrorist activities. At the same time, government service and law enforcement in India is using WhatsApp to render their services, but they do not have a person of contact at WhatsApp should they face any problems. “The biggest messaging platform has no WhatsApp number of its own, which in turn is dangerous for the Rule of Law in India.”
  2. WhatsApp is not complying with the IT Act 2000, which mandates that all intermediaries appoint a grievance officer. Further, WhatsApp current grievance officer is based out of the US, making the position ineffective.
  3. WhatsApp does not pay any taxes in India, which violates the freedom to do business under Article 19.
  4. “WhatsApp must be directed to store the data in Indian servers as mandated by Reserve Bank of India and pay taxes on income caused due to its operations in India,” the petition states.
  5. WhatsApp being an OTT service which enables users to make calls, send messages and media, just like TSPs, does not follow any grievance redressal and data localisation norms that govern TSPs.
  6. Political parties use WhatsApp groups to message voters during the 48-hour silent period.

The bench said, “Don’t worry our arms are long enough. They cannot escape the law,” and added that the issue requires a detailed hearing and listed the matter in July.