Google Pay declared as “Not a Payment System Operator ” by RBI
By – Vidhushi Arya
GooglePay is a mode of online cashless payments. It is a simple and an easier way to make payments using your google accounts wherever you are eg: in stores, in apps, on the web, and on google itself. It basically helps an user to keep everything they require ( i.e. debit cards, credit cards ,loyalty, gifts etc.) in order to make payments secure at one place. In short it provides an user all such facilities that maybe be provided to them by their Banks.
Last year on 8th April 2019 , the Delhi High Court had demanded the Reserve Bank of India to explain how Google was carrying out it’s payment services in India without any approval or license from the RBI being the Central Bank of the country. The question followed from the Public Interest Litigation (PIL) which stated that Google Pay was operating as PSP (Payment Service Provider ) in contravention of the Payments and Settlement Act , 2007. The PIL also stated that Google’s name was not enlisted in the list comprising of the names of the authorised “payment service operators” dated 20th March. The PIL read :
“The Google India Digital Services Private Ltd doing business as Google Pay though its unauthorised operation in India as Payment and Settlement Systems has unmonitored and unauthorised access to the personal information such as Aadhaar, PAN, transaction etc. of the public by acting as a Payment and Settlement Systems,” .
In reply to plea Google had stated that it acquiesces with all the applicable legal prerequisites and that it acts as a technology service provider to all of it’s partner banks for the purposes of allowing payments through the UPI framework and it does not form a part of the payment processing or settlement. Therefore, the need for licensing of these services under the current statutory and regulatory provisions is not there. It had further added that they are keeping in view the need for secure and uninterrupted services taking the needful steps which are well informed to the Central Bank and that they are devoted to adhere to the law of the land.
This notice of the Court came as a shock to the industry since Google offered the payment services through the UPI platform which does not require the approval of the RBI but the NCPI.
As stated above it requires the approval of NCPI , Google Pay was able to conduct it’s services in the country because it had the approval of NCPI, which runs the UPI and allows and keeps a check on all the payment services in India. Google Play appears on the on the list of third party apps that are approved for the purposes of carrying out UPI transactions and has it’s tie-ups with various banks such as the ICICI Bank, HDFC and Federal Bank.
“Google Pay is an authorised vendor for the acquiring banks (to whom the payment is due) which are authorised payments systems provider. To give a telecom analogy, if you go back 10 years, Bharti Airtel was the telecom licensee, and One97 Communications was the vendor, which was providing mobile Value Added Services.”
In the recent hearing , RBI told Delhi High Court that GooglePay is a 3rd party app provider and does act as any payment system and it’s operations therefore do not contravene the Payment and Settlement System Act, 2007 . Further RBI stated that because of the reasons stated above GPay does not qualify the list of authorised payment system operators released by NCPI. The bench has decided to hear the matter in detail on later date i.e 22nd July 2020.