Home Articles Why WhatsApp Payments Should Come Out of Beta Phase

Why WhatsApp Payments Should Come Out of Beta Phase

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The beta testing of WhatsApp payment service which commenced from February this year is still on and this has its own security and privacy implications. Read on to know more about it…

In February this year WhatsApp, the instant messaging app owned by Facebook rolled out the payment service that integrated the digital payments feature based on Unified Payment Interface (UPI). Thus, began the beta testing phase of WhatsApp payment service to limited number of users. Even after 5 months of the beta testing phase of WhatsApp payment, it’s yet to formally launch the payment service in India.

The real reason for delaying the launch of WhatsApp payment is the fact that Facebook, the company that owns WhatsApp is yet to comply with the Reserve Bank of India (RBI) guidelines on data storage, processing of user data and data localisation. In April 2018, the RBI had directed all payment vendors to store all financial data related to Indians users in India. This directive of RBI had irked a lot of fintech firms, including major card networks and Facebook who had rolled out its beta version of WhatsApp payment earlier.

While local payment service providers like Paytm and other vendors complied with the RBI guidelines on the usage of user data and data localisation, a group of foreign firms, including card networks and Facebook, was trying to get the mandatory requirement of storing all copies of data in India relaxed. This is one of the key reason why National Payments Corporation of India (NCPI) which runs the UPI has not granted WhatsApp a full-scale operating licence for the payment services in India.

Privacy Policy
WhatsApp privacy policy specifies that users in the country should agree to their payments data being stored in the US and other countries. The official page of WhatsApp for terms and conditions of Indian payment service states that “If you use Payments, you agree to our data practices, including the collection, use, processing, and sharing of your information as described in our Privacy Policy and our Payments Privacy Policy, as well as the transfer and processing of your information to the United States and other countries globally, where we have or use facilities, service providers, or partners, regardless of where you use Payments. You acknowledge that the laws, regulations, and standards of the country in which your information is stored or processed may be different from those of your own country.”

After it was reported in the media that WhatsApp was sharing data with Facebook, Facebook clarified that WhatsApp was not sharing any financially sensitive information with it. However, the latest privacy policy on its website updated on June 22 states that the WhatsApp does share information with third parties, including Facebook. WhatsApp came with the statement that — as the financial transactions of WhatsApp payment service is encrypted, even Facebook app cannot access the encrypted transaction information. Again, it’s not clear exactly how much of crucial financial information of WhatsApp financial data is encrypted.

Privacy & Security Concerns
To ensure the privacy and security concerns of WhatsApp users and government of India, Facebook should dispel the fear of user privacy and data safety that arose after the involvement with Cambridge Analytica, in cases relating to data misuse. WhatsApp also needs to open itself to UPI conditions. WhatsApp payment in the beta version does not ask for log-in password, which is a huge security risk for consumers.

As a matter of fact, the two key reasons for WhatsApp not being given the go signal from various government bodies is the non-compliance relating to 2 factor authentication and data localisation.

Currently, WhatsApp is awaiting clarification from the Reserve Bank of India on data storage before it will a final call on data localisation. Only after this process, Facebook will be formally launching the services of WhatsApp Payments in India.

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