WhatsApp seen on a smartphone. Reuters/Dado Ruvic

WhatsApp just got exposed for sharing its users’ payments data with its parent company, Facebook. The revelation comes at a time when Mark Zuckerberg’s company is facing criticisms following the Cambridge Analytica scandal.

Factor Daily reported Wednesday that India’s central bank and the country’s ministry for information technology have expressed their concerns over WhatsApp’s practice of sharing its payments service data with Facebook. “They raised concerns over WhatsApp sharing data with Facebook, which many see it as a threat to data privacy in the country,” an Indian government source told the news outlet.

After learning about WhatsApp’s practice, the Reserve Bank of India and the Ministry of Electronics and Information Technology held talks with the National Payments Corporation of India (NPCI), two unnamed sources said. NPCI is the body that facilitates digital payments in the country. The fact that Indian authorities are discussing WhatsApp’s data-sharing practice with it could mean a delay in the wider adoption of WhatsApp Payments in India.

WhatsApp Payments was launched in India in February 2018. Because it is fairly new, the service is currently available to a small number of users in private beta only. The ultimate goal of its release in India, however, is for it to become a widely used service by the more than 240 million WhatsApp users in the Asian country.

At launch, some of the existing mobile payment players in India criticized WhatsApp Payments for being insecure. Then in March, WhatsApp disclosed that it utilizes Facebook’s infrastructure when processing payments. Since Facebook is currently suffering the consequences of the Cambridge Analytica scandal, it’s not surprising why Indian authorities are alarmed by the data-sharing that’s transpiring between WhatsApp and its parent company.

In the FAQ’s section on its platform however, WhatsApp maintains there’s nothing wrong with its act of sharing payments data with Facebook. “Facebook does not use WhatsApp payment information for commercial purposes, it simply helps pass the necessary payment information to the bank partner and NPCI. In some cases, we may share limited data to help provide customer support to you or keep payments safe and secure,” WhatsApp was quoted by First Post.

The issue with WhatsApp’s data-sharing practice with Facebook also appears to be one of the reasons why WhatsApp co-founder Jan Koum left the company last month. The Washington Post reported around the time when Koum announced his departure that “the founders ... clashed with Facebook over building a mobile payments system on WhatsApp in India.”

An NPCI senior executive does not have a problem with WhatsApp using the same infrastructure as Facebook though. “Many group companies share the infra so no issue on that,” the executive said before noting that the concern here mainly lies on what the shared data is used for.

Apart from WhatsApp, other platforms in India have confirmed that they do not share their payment data with their parent companies. This is why many experts are all the more worried over WhatsApp’s practice of sharing data with Facebook.

The remedy for the issue that the NPCI is looking into is requesting WhatsApp to set up a server in India so that all payment data its WhatsApp Payments service collects will reside only in the country. A source has confirmed that the Indian government “will soon communicate with WhatsApp to set up a server in India to store the payments data locally.”