The Prime Minister’s Office (PMO) has raised an alarm over the functioning of foreign digital payment providers. It has written to the Union Ministry of Home Affairs (MHA), citing concerns raised by the Intelligence Bureau (IB), and a possibility of money laundering because the data of these firms is not accessible to Indian authorities. The communication, sent days after RBI asked foreign-based digital wallets to store data within India, says there should be a proper mechanism to regulate their working as they could be involved in money laundering, top government sources told DNA.

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Foreign e-wallets got a push after demonetisation as the government aimed at moving towards a “cashless” economy but later said a “less-cash” economy is the way forward. As the government wants to encourage digital transactions, security concerns over data controlled by foreign platforms could be a hurdle. “With serious apprehensions on storage and access to their data, there is a need to bring them under a stringent framework,” said a government official. Based on this, the PMO has asked MHA to consult all stakeholders like the Department of Information and Technology and come out with an action plan.

The government is grappling with issues concerning foreign digital payment. One is data residency or its location. Data access is another grey area because Indian authorities cannot get details on transactions. The ownership of a company, whether the hardware or software being used is Indian, foreign or open source and data control, which means who manages statistics, are some of the issues that authorities have red flagged.

The RBI asked operators to store data of domestic transactions, setting a deadline of October 15.   “All system providers shall ensure that entire data relating to payment systems operated by them are stored in a system only in India. Data should include the full end-to-end transaction details / information collected / carried / processed as part of the message / payment instruction,” the RBI notification said.

Glimpses of cash crunch faced post demonetisation were seen last week as ATMs across the country went dry.

(By Abhishek Bhalla, DNA)