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DPDP Act: A detailed breakdown for businesses
In a digital-first economy, the lack of personal data protection measures is a liability. In 2025, India recorded the highest average cost of a data breach at ₹22 crore.
But it goes beyond money. Lack of data protection measures is risky because:
• Customer trust is on the line: A secure checkout experience reassures data safety. Without it, even a hint of insecurity can drive customers to competitors.
• Reputation is fragile: Data breaches and payment fraud cause both financial loss and make headlines. Rebuilding trust after a breach can take years.
• Legal and financial penalties: Non-compliance with security standards, regulatory requirements, and data protection laws—such as PCI DSS, RBI mandates, or GDPR—can result in fines, restrictions, or operational limitations.
Thus, the DPDP Act was introduced to solve both personal data protection and keep Indian businesses competitive in the global arena.
DPDP Act: A detailed breakdown for businesses
What is the DPDP Act?
The Digital Personal Data Protection Act 2023 is a cross-sector law that governs how businesses collect, process, store, share, and protect personal data. Crucially, the Act assigns accountability to entities that determine how and why personal data is processed, not just those that physically store it.
In simple terms, the act places higher accountability, levies penalties, and ensures the protection of personal data.
Key note: The DPDP Act functions as an additional layer of compliance for entities already regulated regularly under the 2007 PSS Act.
What is the scope and the different roles under the DPDP Act?
The DPDP Act is a cross-sector law and includes many traditional and new-age digital-first businesses, like:
• E-commerce players
• SaaS platforms
• Marketplaces
• Payment Service Providers (PSPs)
Roles under the DPDP Act 2023
Roles | Definition | Responsibilities |
Data Principal | The person whose personal data is being processed (customer, user, employee) | • Know what data is collected and why • Access and correct their data • Withdraw consent • Request erasure (where legally allowed) • Nominate someone to act on their behalf |
Data Fiduciary | The entity that decides why and how personal data is processed | • Ensure a lawful basis for data processing • Protect data with reasonable security safeguards • Honour Data Principal rights • Govern vendors and processors • Report data breaches • Remain accountable at all times |
Data Processor | An entity that processes personal data on behalf of a Data Fiduciary under instructions | • Process data only as instructed • Implement security safeguards • Notify breaches to the fiduciary • Not reuse data for their own purposes |
Key note: If your business touches customer, employee, or user data, directly or indirectly, the DPDP Act applies.
Checklist for compliance with the DPDP Act for businesses
Areas of focus | What it means for businesses | Key compliance steps |
Data mapping and inventory | Visibility into all personal data held and processed | Identify data types, sources, systems, vendors, and purposes |
Lawful basis for processing | Every data use must be legally justified | Document whether processing is based on consent or legitimate use |
Consent management | Consent must be valid and revocable | Use plain-language notices, granular consent, and easy withdrawal |
Data minimisation and purpose limitation | Collect and use only what is necessary | Review forms, APIs, analytics, and internal reuse of data |
Storage limitation and deletion controls | Data must not be retained indefinitely | Define retention periods and implement deletion workflows |
Security safeguards | Personal data must be protected | Implement access controls, encryption, monitoring, and incident response |
Vendor and processor governance | Third parties must meet DPDP obligations | Add data protection clauses, breach SLAs, and audit rights |
Data principal rights enablement | Users must exercise their data rights | Enable access, correction, erasure, consent withdrawal |
Breach detection and notification readiness | Breaches must be identified and reported | Incident playbooks, escalation paths, notification readiness |
Governance, accountability, and training | Compliance needs ownership and oversight | Assign responsibility, train teams, and conduct reviews |
Conclusion: Compliance with the DPDP Act ensures a secure, scalable future
The DPDP Act 2023 brings clarity and accountability to how personal data is processed, helping businesses build trust and credibility with fellow businesses. For data-intensive operations such as digital payments, this trust depends on working with partners that adhere to RBI regulations.
Audit-ready, RBI-aligned platforms such as Zoho Payments demonstrate how compliant payment infrastructure can reduce risk and support secure, scalable growth. Find out how you can do the same for your business.
Frequently Asked Questions
The Digital Personal Data Protection Act, 2023, is India’s national law that governs how businesses collect, process, store, share, and protect personal data in digital form. It introduces clear accountability, enforceable obligations, and monetary penalties for non-compliance.
A business is DPDP compliant when it can clearly show that it knows what personal data it collects, has a lawful basis for using it, limits collection and retention to what is necessary, and protects it with reasonable security safeguards. The best way to identify is through a comprehensive audit.
Per the DPDP Act, businesses must redesign how they collect data, manage consent, secure systems, oversee vendors, respond to breaches, and handle user requests. Non-compliance can result in various legal and financial penalties.
A DPDP-compliant payment partner is one that follows lawful data processing, strong security safeguards, and transparent data governance. Platforms such as Zoho Payments are built with privacy-by-design principles.