Major U.S. payments companies are facing fines for violating a data law in India.
According to The New York Times, a new regulation going into effect on Tuesday (October 16) requires payments companies to store all information about transactions involving Indians on computers in the country. But Visa, Mastercard and American Express, as well as firms like Amazon and PayPal, have requested more time to comply with the order, explaining that their fraud detection and other data processing systems used around the world could not be quickly redesigned to work in India alone. Instead, the companies offered to store copies of the Indian data in the country so that regulators, tax authorities and law enforcement could easily access them.
But the Reserve Bank of India (RBI) warned the firms that it would take action, including imposing fines, if they missed the deadline.
Mukesh Aghi, the chief executive of the U.S.-India Strategic Partnership Forum, admitted that the payments companies were frustrated with the regulators. “They refuse to sit down and have a discussion,” he said.
Spokesmen for Visa and American Express declined to comment, while representatives of Mastercard and the RBI did not respond to multiple requests for comment. Amazon said in a statement: “Compliance with local laws and regulation is a top priority for us in all the countries we operate in. We continue to work closely with the regulator towards this.”
The U.S. government is also going to bat for the companies, with U.S. Senators John Cornyn and Mark Warner, co-chairs of the Senate India caucus, sending a letter to India’s Prime Minister Narendra Modi urging him to soften his stance on rules. The Senators warned that requiring the data stored locally amounts to “key trade barriers” between the two countries.
“We see this (data localization) as a fundamental issue to the further development of digital trade and one that is crucial to our economic partnership,” the U.S. senators said in the letter.