Did India’s Paytm Share User Data With The Government?

Paytm, India’s leading digital payments service, is in a soup after an investigative report allegedly shows a senior executive at Paytm claiming that the company had shared user data with the Prime Minister’s Office (PMO) last year.

Founded in August 2010 by Vijay Shekhar Sharma and now valued at $10 billion, Paytm is one of the beacons of India’s startup story and a leader in the country’s nascent fin-tech space. Paytm investors include Softbank, SAIF Partners, Alibaba Group and Ant Financial.

On May 25, investigative news publication, Cobrapost released a video as part of an exhaustive ‘sting’ operation dubbed ‘Operation 136’. The investigative report is based on an interaction with an undercover journalist posing as a religious organization’s head looking for an opportunity to peddle its propaganda via Paytm and the company’s e-commerce store, Paytm Mall.

The video shows Ajay Shekhar Sharma, a Senior Vice President at Paytm, sharing how the PMO had asked for the personal data of some Paytm users in the aftermath of stone-pelting by the locals confronting Indian armed forces in Jammu & Kashmir. This, if true, is a breach of company’s privacy policy.

Ajay is incidentally the younger brother of Paytm’s founder and has been with the company since its inception, and before with its parent company – One97 Communications – since over a decade rising through the ranks to be a Senior Vice President since last year.

“At Paytm, your data is yours”

According to the company’s privacy policy, Paytm will not share user’s personal information with any third party.

We will not sell, share or rent your personal information to any 3rd party or use your email address/mobile number for unsolicited emails and/or SMS.

Late in the evening on May 25, Paytm tweeted a clarification that there was no truth in the allegation.

There is absolutely NO TRUTH in the sensational headlines of a video doing rounds on social media. Our users’ data is 100% secure and has never been shared with anyone except law enforcement agencies on request. Thank you for your continued support.

It was an odd statement from the company. The video in question was not a random viral video on the interwebs but an investigative report that caught a senior executive from the company on the camera. Of course, there could be misrepresentation or Cobrapost might have edited the video to suit their narrative, but Paytm arrogantly chose not to explain that conversation.

Next day, on May 26, the company published an official blog post to reiterate its stance on user data while slightly contradicting the tweet from the previous day.

We never share your data with anyone: any company/ any government or any country. At Paytm, your data is yours. Not ours, or of a third party, or of the government.

To further clarify, in the past, we have neither received requests nor shared any data without a legally compliant request from a bonafide agency and through proper process and channels. You can be sure, we have never shared, nor will share your data with anyone whom you never gave us permission to share with. This is the holy grail of trust between us.

Again, the blog post does not mention anything about Ajay Shekhar Sharma’s statement on request of user data from the PMO and neither informs customers whether the company will undertake an internal probe into the matter. The PMO too hasn’t made any statement on the allegation.

Paytm’s affinity with the BJP Government

In the alleged conversation, Ajay clearly states his political affiliations and shares that the company has done a lot for the ‘Sangh’, a reference to Rashtriya Swyamsevak Sangh, the right-wing Hindu nationalist organization that ideologically steers the ruling Indian government.

The political affinity of a company’s leadership and their ideological bent though doesn’t affect most users, and the company’s hobnobbing with the BJP Government is not a secret. In the Cobrapost report, Sudhanshu Gupta, a Vice President at Paytm, too hinted at the company’s political bent showing the undercover reporter how they promote Narendra Modi’s book ‘Exam Warriors’ on the homepage of its apps.

On November 8, 2016, the Government of India announced the demonetization of all ₹500 and ₹1000 banknotes with an aim to curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism. The exercise was described as “a case study in poor policy and even poorer execution” by the Harvard Business Review.

The announcement was made by Narendra Modi, Prime Minister of India, in a live televised address late in the evening, and the next morning on November 9, leading newspapers in India had full-page advertisements on the front page from Paytm congratulating the Prime Minister for ‘taking the boldest decision in the financial history of independent India’. Many criticized the company for hailing the government’s move since the sudden nature of the announcement and the prolonged cash shortages in the weeks that followed created significant disruption throughout the economy.

Paytm was, of course, one of the biggest beneficiaries of demonetization (along with other mobile wallet services). Due to the cash shortage, more and more people signed up for mobile wallets and in the next one month, Paytm added over 20 million new users and Vijay Shekhar Sharma became India’s youngest billionaire.

Can you #DeletePaytm?

A lot of social media chatter since the Cobrapost exposé is about users deleting their Paytm account because of the privacy breach and the mingling with the government. Mostly a knee-jerk reaction, it is also fueled by that uninspiring clarification by Paytm.

Yet, for those interested in closing their accounts, Paytm does not make it easy. There’s no option on the Web or on the apps to delete one’s account. The only legitimate way to request closure of the account is by writing to the company’s support email.

Then again, many believe that the account is just deactivated and the user information is not necessarily expunged. Paytm also has to come clean on this while offering a better mechanism for users jumping the ship.

At the moment, it’s stormy waters all around.