PayPal open to store transactions data in Indian servers

BENGALURU: Online payments firm PayPal is open to locating transaction data of its customers in India locally and said it is engaged with the Reserve Bank of India (RBI) to understand its mandate issued last week asking payment firms to comply within six months.

The RBI on Thursday noted that few payment system operators and their outsourcing partners store the payment system data, either partly or completely, in the country.

It now wants data of all transactions in India to be hosted locally. “One of our competitive advantages is the fact that we look at compliance and regulations, and work with local government. Our intent is always to work with regulators and comply as closely and as best possible,” Sri Shivananda, chief technology officer of PayPal told ET.

PayPal is the first large global company to publicly respond to the RBI note. In November, it signalled its intent to tap the local market by launching domestic payments option. The firm will compete with local players such as Paytm and global firms such as WhatsApp and Google’s Tej, which works on the government stipulated unified payments interface (UPI) standard. The company, founded by Elon Musk and Peter Thiel, disrupted the digital payments space in the US over two decades ago.

India joins other nations such as Russia to insist on local storage of transaction information within the country while enabling its enterprises to be part of the global financial network. Amidst growing privacy concerns, there is awareness among governments that individual financial data when moved outside the country without oversight could be damaging for the economy. “Most countries are looking at options to help their economies participate in the global market, and are at the same time, trying to protect their citizens from privacy and security risks,” Shivananda said.

Paypal says it would make the necessary technology changes in its platform to comply with new local rules based on inputs from the regulators. The firm is looking at government-sponsored UPI, a standard that allows easy money transactions on smartphones through the banking network, as another mechanism for a less cash economy. “Even though we are prevalent in cross border trade, we are just getting started here. All options are on the table. We absolutely intend to do whatever is best for our customers,” Shivananda said.

The firm has been helping millions of freelancers and small firms in India to get their payments for services from countries such as the US. For its remittance firm Xoom, India is among the largest end markets for people to send money home from overseas. “Our global stance is that we strongly believe our competition is cash. The percentage of cash transactions around the world and even in India is still fairly large,” he said. “We are in the early days of a long marathon in India.”