Delhi High Court orders RBI, central government to respond to pleas on flouting of norms by Google Pay

The Delhi High Court has asked the Reserve Bank of India, the government of India and Google India Digital Service to respond to a plea alleging that Google Pay the digital payments product of Google was flouting norms of interoperability.

The respondents have been given three weeks to respond to the petitioner’s allegations.

Among the pleadings, the petitioner has asked for immediate withdrawal of services of Google Pay till it complies with interoperability guidelines set by the National Payments Corporation of India, which runs the Unified Payments Interface platform. It has also sought for imposition of a penalty of ten times of the revenue of Google Pay since the start of its operations in India and the amount be used for COVID-19 relief work in the country. It has also sought for an independent third-party audit by Cert-IN or similar entities.

Google Pay offers digital payment services through UPI which allows inter-bank fund transfers through smartphones. It works with four banks ICICI Bank, State Bank of India, HDFC Bank and Axis Bank to offer these services. Currently anyone who wishes to use Google Pay needs to create a virtual payment address through one of the four banks and use the app for payments directly to other bank accounts. The petitioner has said that this point violates the NPCI guidelines which say that merchant applications cannot force consumers to create a separate VPA to avail its services.

Google only acts here as the third party payment player acting as a front end payment application but fund transfers are done at the end of the banks. The settlement is run by NPCI. This is not the first time there has been a PIL filed against Google Pay. Back in 2019 a PIL was filed alleging how the tech giant was offering payment services in India without being recognised as a payment and settlement entity by the Reserve Bank of India.

Google Pay had then clarified that it was just a service provider to banks.

UPI which was launched back in 2016 has emerged as a critical public infrastructure with more than a billion transactions happening every month. There is intense competition among the players in this ecosystem, between PhonePe, Paytm, Google Pay and Amazon Pay. Now even WhatsApp is set to enter the payments space with WhatsApp Payments.