The Indian government is very much concerned about the WhatsApp payments service feature and is holding up plans by the owner company Facebook Inc. for a nationwide launch. The government is concerned about how data will be stored and other issues, as per the report by people familiar with the matter.

The company, WhatsApp, and its partner banks have been asked by the country’s Ministry of Electronics and Information Technology, or MEITY to avail more details about the payments system, according to the ministry officials who talked over the matter on condition of anonymity. MEITY has also requested the industry’s payments watchdog, the National Payments Corporation of India, to confirm whether the payment system of WhatsApp is fully compliant with all its requirements, they reported.

“We are working closely with the Indian government, NPCI and multiple banks including our payment service providers to expand the feature to more people,” Anne Yeh, a WhatsApp spokeswoman, said while responding to emailed questions, but declined to elaborate on the timing of a country-wide launch. Dilip Asbe, NPCI’s chief executive officer, also declined to comment over the issue.

The delay in the payments systems launch for WhatsApp comes at a moment when the company is embroiled in a controversy over lynching in the country. Altered images and false videos on the messaging platform of child abductions are becoming viral mainly in rural areas making the people believe those false rumors who in turn are taking law into their own hands by beating and lynching to death suspected people across the country. On Thursday, the ministry (MEITY) warned in an issued statement that the company will have to face legal action for abetting violence if it does not take any crucial step towards safeguarding the platform. Requests for comment on the Ministry’s statement was declined by the company.

It’s not at all clear about the role the scandal (if any) is playing in the WhatsApp approval process. India’s central bank recently directed payment services to store customer data on local servers only to safeguard privacy and security. This was done as a step to meet compliance standards. The delay to expand its services may cost the Facebook-owned company from payments leaders like Paytm, locally, and Google Inc’s Tez and Sweden’s Truecaller, globally.

“Rivals have an early-mover advantage and a further hold-up could mean that WhatsApp loses out on converting users and business customers,” said Arnav Gupta, a New Delhi-based digital business strategy analyst at Forrester Research Inc. “The faster they roll out, the quicker they can make improvements based on user and business feedback and make it seamless.”

The technology giant, WhatsApp, has become a powerful growth engine which started as a messaging service where groups share gossip and viral videos. India is, as of now, WhatsApp’s largest market globally with a total number users of 230 million users and the business in the payments segment has drawn nearly 1 million people since the limited, beta test was unveiled in February.

WhatsApp is expected to further its service nationwide as soon as June, as per the report by Bloomberg News in May.

The rivals are at threat from WhatsApp’s digital payments push, because of its sheer number of users are confined to a Facebook ecosystem. Its service is like China’s WeChat which grew in its numbers to hundreds of millions of users and later dived into payments segment to become at last a major player in mobile finance. The founder of Paytm, Vijay Shekhar Sharma, has put up allegations on Facebook of evading security requirements during its pilot so that it can create a “walled garden” – a big database of lucrative user information over which it exercises full control.

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