RBI has informed the Supreme Court that WhatsApp is non-compliant with data localisation norms and hence cannot be allowed a full-scale launch of a payments business (on UPI).

“The RBI has examined the said reports (by NPCI) and the responses of NPCI and is of the considered view that WhatsApp is storing the following payment data elements outside India beyond the permitted timelines indicated in the circular and frequently asked questions (FAQs) on storage of payments system data issued by RBI on June 26, 2019,” [via/ToI]

“When a customer raises a dispute, WhatsApp application (client) logs, query screenshots uploaded by a customer, and consumer email message are shared with the support team located in Hyderabad and USA and are stored for a period of 90 days. Although the logs do not contain payment data as contended by auditor, screenshots uploaded by customers and customer email message may contain payment data,” RBI added.

This is a huge blow to WhatsApp (though might be life-saver for several fintech startups selling to MSMEs). WhatsApp, meanwhile continues to build great useful products for MSME market (recently launched Catalog).