India Verifies WhatsApp Compliance Before Payments Service Approval

India is reviewing an audit report on data practices of WhatsApp Inc. to ensure compliance with local rules before permitting a nationwide debut of the Facebook Inc.-owned company's long-delayed payments service.

"We have received the data localization compliance system audit report from WhatsApp, which shall be reviewed in the next few weeks," a Mumbai-based representative for National Payments Corp. of India said without providing any further details.

As and when it gets approval, WhatsApp will be entering a crowded digital payments market where it will have to slug it out with more than 80 rivals on the NPCI platform, including Google and Amazon.com Inc. to garner users. India's digital payments market is projected to grow five-fold and hit $1 trillion by 2023, according to a report by investment bank Credit Suisse Group AG.

WhatsApp has substantial strengths including an India user base that's estimated at more than 300 million. Unlike many other service providers, it doesn't need to put in cash to acquire customers.

The messaging app's payments offering has been in a testing stage in India since early 2018 for a million users. It has been barred from expanding its reach till the offering complies with the country's data regulations. Rules require WhatsApp to submit a third-party auditor report that all data involved in payments will be only stored on servers in India.

"Restrictions on adding new customers will continue for WhatsApp as of now. Once the regulator has gone through the report from the third-party auditor on data compliance we will take further steps accordingly," Dilip Asbe, the chief executive officer of NPCI, said in a recent interview.