PayPal has agreed to store its transaction data in India after RBI issued a mandate asking all the payment firms to comply within six months. The aim is to allow participation in the global market as well as protecting consumer data privacy and security risks. PayPal is the first company that has responded publicly to RBI. 

India: PayPal, a global online payments company is in favor of locating the transaction data of its customers in India and is trying to understand the mandate issued by Reserve Bank of India (RBI) recently, which asked payment firms to comply within six months.

The RBI noted that some payment system operators and their outsourcing partners store the payment system data, either partly or completely in India. RBI wants data of all transactions in India to be hosted locally. The Chief Technology Officer of PayPal, in an interview said that the major competitive advantage of the company lies in fact that they look at compliance and regulations, and work with local the government. The company aims to work with regulators and comply as closely and as best possible.

PayPal is the first global company that has publicly responded to the RBI note. In November 2017, RBI had hinted towards its intent on tapping the local market by launching a domestic payments option.

The company will be up against local players such like Paytm as well as global firms like WhatsApp and Google’s Tez, that works on the government specified unified payments interface (UPI) standard. PayPal, founded by Elon Musk and Peter Thiel, has been changing the digital payments space in the US over two decades ago.

India has joined the league of nations like Russia to insist on local storage of transaction information within the country, at the same time enabling its enterprises to be part of the global financial network. Due to the growing privacy concerns, the government is becoming aware of the threats on the economy if individual financial data is moved outside the country without supervision.

According to PayPal, majority of the countries are looking for options that help their economies to participate in the global market, while simultaneously trying to protect their citizens from privacy and security risks. PayPal has claimed that it would make the necessary technology changes in its platform to comply with the new local rules based on inputs from the regulators. The company is looking at government-sponsored UPI, a standard which allows easy money transactions on smartphones through the banking network, in line with the government’s dream of a cash-less economy.

The CTO further stated that despite PayPals’s prevalence in cross-border trade, the company is just getting started in India. As a result, they are open to all options are on the table. The firm intends to do whatever is best for the customers.

PayPal has been aiding millions of freelancers and small firms in the country to get their payments for services from other countries like the United States. India is one of the largest end markets for people to send money home from overseas as per the PayPal’s payments firm Xoom.

According to TechSci Research, with the rise of digital payments, the risk of fraudulent activities is at an all-time rise. The government initiatives for securing payments and bringing in laws for enhancing data protection have propelled the need for payment security in the coming years. Factors such as stringent PCI DSS guidelines and growing smartphone and e-commerce market are likely to boost demand for payment security solutions and services in the coming years. The implementation of payment security solutions and services across various end use verticals such as BFSI, retail, hospitality & transportation, etc., is increasing at a robust pace, as the volume of payments done via digital means such as credit/debit cards, mobile phones, etc., in increasing exponentially. Payment security adoption has enabling these verticals to minimize payment data theft, along with gaining the consumer confidence. Moreover, the emergence of next-generation payment systems and increasing number of government initiatives towards securing digital will drive the market for Payment Security in the future.

According to the recently published report by TechSci Research, “Global Payment Security Market, By Type (POS, Web & Mobile), By Component (Solutions Vs. Services), By Solution (Antivirus & Firewall, Data Encryption, Tokenization & Others), By End User, By Region, Competition Forecast & Opportunities, 2012 – 2022”, Global payment security market stood at $ 9 billion in 2016 and is forecast to exhibit a CAGR of nearly 14% to reach $ 19.6 billion by the end of 2022, on the back of increasing number of cyber-attacks and data breaches, worldwide. Growing popularity of payment security solutions and services can also be attributed to the requirement of following Payment Card Industry Data Security Standard (PCI DSS) guidelines, government initiatives towards promoting the cashless mode of payments, and increasing awareness among end users towards payment security. Moreover, growth in the number of digital payments such as credit/debit payments, mobile wallets and online payments is also expected to aid the payment security market, globally, during forecast period.

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