It was bit unexpected when Delhi high court on Wednesday sought explanation from Reserve Bank of India over Google Pay’s operation in India, citing that the search engine giant did not seek any authorized approval from the central bank. Delhi HC’s comment came in response to public interest litigation filed by a person called Abhijit Mishra, according to report filed by the press trust of India.
Mishra in his PIL has stated that the central bank hasn’t enlisted Google Pay as an authorized payment company under the Payments and Settlement Systems Act, 2007. He further stated that the search engine giant’s name is conspicuously missing in the list of authorized “payment service operators” issued by the RBI few weeks back.
Commenting in response to the PIL, Google claimed that it does not need any licensing under prevailing statutory regulation as it facilitates only financial transaction by using UPI infrastructure and is not part of the payment processing or settlement. This view is also been backed by banking and financial experts; arguing that players like Google Pay and WhatsApp that offer only UPI payment services don’t have to hold license under current regulatory procedure.
Delhi HC’s adverse observation has come at a time when digital payment companies have come under scanner for security purposes. However, it is very unlikely that this observation will have any impact on Google Pay’s operation in India. The service currently boosts 45 million monthly active users and along with Phone pe is closing on the market leader Paytm. Amazon pay – payment unit of e commerce giant Amazon – is another prominent player.
India’s digital payment sector is witnessing hyper competition as increasing smartphone and internet penetration has made this a highly lucrative sector. The entry of messaging giant WhatsApp has further intensified the competition.