WhatsApp has announced its UPI-based, peer-to-peer payment service back in February 2018 in India. Following this, it also added the feature where a user can send money to any UPI Virtual Payment Address (VPA). However, as per Paytm WhatsApp's payment service is not set up as per the regulations that are set by the Indian government. Paytm is also says that WhatsApp is sharing its data with its parent company Facebook.
Now, it's the Reserve Bank of India and the Ministry of Electronics and Information technology (MeitY) have also raised concern regarding the same. The authorities at the RBI and MeitY have also enquired about the practice of sharing payments data with Facebook. It is highly likely that WhatsApp will be asked to explain the use if the Facebook infrastructure for its platform.
Also, a government official who has knowledge on the new developments said that "They raised concerns over WhatsApp sharing data with Facebook, which many see it as a threat to data privacy in the country". It is also being reported that the MeitY and RBI have held discussions with the NPCI (National Payments Corporation of India that regulates all digital payments system in India. The NPCI also regulates UPI which WhatsApp uses for money transaction. However, as of now, there has not been any updates issued by the NPCI.
WhatsApp, on the other hand, has acknowledged sharing 'limited data to help provide customer support'. As per WhatsApp, it shares the data to keep the payment service up and running. The company is also assuring the users that Facebook doesn't use the payment data for the commercial purposes. The only major concern is about what the data is being used for.
It is also being reported that the regulatory body has imposed a brief restriction on WhatsApp Payments. The restriction states that until the service reaches over a million users and adds cross-platform payments support for other UPI-based services. Until then it will be available in a beta state before the global roll-out.
WhatsApp will need to cross another hurdle which is the RBIs upcoming data storage law. The laws state that the financial data of the users needs to be stored on local servers. So it is clear that WhatsApp will have to go through some regulatory hurdles before it can roll out the WhatsApp Payments on a larger scale in India.