NEW DELHI- According to sources and documents were seen by Reuters, “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”.
In the month of April, India’s central bank, 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 but the rules give a competitive advantage to Paytm, backed by Japan’s Softbank Group and China’s Alibaba, which already stores all its data in India. The company has publicly supported the proposal and, behind closed doors, tried to thwart efforts of those opposing them.
Paytm’s spokeswoman Sonia Dhawan did not comment on Reuters queries about the government meeting, but said “for the benefit of the country and to uphold the need for data privacy, all the data related to the Indian users must be stored and processed” only in the country.
“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 the dominance of card firms such as Mastercard and Visa. 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 displayed by sources.