Vastavam web: U.S. payment firms have successfully pushed India to consider diluting rules on data storage, but their lobbying campaign has sparked a bitter industry spat pitting them against local rival Paytm, according to sources and documents.India’s central bank in April directed payment firms to store data locally for “unfettered supervisory access” – a move companies such as Visa, Mastercard and American Express fear would cost millions of dollars and hamper global fraud detection.
In a meeting between officials and industry representatives in June, chaired by India’s economic affairs secretary S.C. Garg, Paytm argued with foreign company executives on the benefits of storing data locally and said the rules were in the national interest, three people with knowledge of the discussions said.Garg told Paytm not to bring the national interest into a debate around data storage, the sources said. Garg did not respond to a request for comment.
Separately, in May, Paytm privately objected to lobby group Payments Council of India (PCI), which wanted to tell the central bank that “most” of its members had some concerns with the proposal, e-mails seen by Reuters showed.“There is absolutely no need for the data of two Indians doing transactions in India to be shared or stored overseas,” she said.
The tussle between Paytm and other companies highlights the fierce competition that has gripped India’s crowded digital payments market which, according to Boston Consulting Group and Google, is expected to grow tenfold to $500 billion by 2020.Paytm, with its mobile wallet app, has cashed in on the boom by partnering with Indian merchants for payments, eroding dominance of card firms such as Mastercard and Visa.
Neil Shah, research director at Counterpoint Research, said Paytm’s “cross-lobbying” to push for implementation of the new rules made complete business sense as that would force foreign companies to focus on compliance, instead of growth.Digital payments and use of cards in India has soared since November 2016, when Prime Minister Narendra Modi announced a sudden ban on existing high-value currency notes and started pushing digital payments.
Indians in May clocked transactions worth $52 billion using their 964 million credit and debit cards, nearly double the amount recorded back in November 2016. Monthly mobile-wallet payments have risen nearly fivefold to $2 billion during the period, data from the Reserve Bank of India (RBI) showed.