Google Pay not part of payment processing, no license required: Google

Google Pay clears its stand by stating that there is no requirement for licensing of the services they provide under the prevailing statutory and regulatory provision.

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As Delhi High Court seeks an explanation from Reserve Bank of India (RBI) regarding the operations of Google Pay in the country without proper licensing, the company has released a statement in its defense.

According to the statement, Google Pay positions itself as a company that complies with all applicable legal requirements. The company said it operates as a technology service provider to its partner banks to allow payments through UPI infrastructure, and is not part of any payment processing or settlement. “There is no requirement for licensing of these services under the prevailing statutory and regulatory provisions,” the company said. 

The statement also mentioned, “In order to support our partner banks, our efforts in complying with the government's data localisation norms are underway. And given the scale and complexity, we are being mindful to prioritize data security and uninterrupted services to our users as we make this transition. The central bank is apprised of the progress and we remain committed to complying with the laws of the land.”

The question of legality arose after a public interest litigation (PIL) was filed against Google Pay at the Delhi High Court. The PIL claimed its operations in India were a direct violation to the Payments and Settlement Systems Act, 2007. It also claimed that Google Pay has no valid authorization from the central bank to carry out financial transactions in the country. 

The petitioner referred to the RBI’s list of companies that had authority to set up and operate payment systems in India. The list
released on March 29, 2019 included companies like Paytm, Mobikwik and Freecharge, but not Google Pay.
 
The Delhi High Court then issued a notice to RBI and Google India Digital Services seeking an explanation on how Google Pay was still operating in India if it doesn’t have an authorization to operate as a digital payments provider. 

Initially launched as Google Tez in September 2017, the company claims that it has around 45 million active users in a month. 

Google Pay uses unified payments interface (UPI) to enable transactions between bank accounts. Developed by National Payments Corporation of India (NPCI), UPI is a real-time payment system that helps fund transfers between two bank accounts through a mobile platform. 

With inputs from Apurva Venkat.