AIR Spotlight: Linkage between UPI and Singapore’s PayNow

AIR Spotlight is an insightful program featured daily on the All India Radio News on air. In this program, many eminent panellists discuss issues of importance which can be quite helpful in IAS exam preparation.

This article is about the discussion on: Linkage between India’s UPI and Singapore’s PayNow digital payments systems.

Participants: 

1. Rabi Sankar: Deputy Governor, RBI
2. Sonu Sood: AIR Correspondent

Context – In the first such collaboration for India, the country’s flagship payments platform, the Unified Payments Interface (UPI) and Singapore’s PayNow payment system have launched a real-time cross-border payment linkage system.

India’s real-time retail payment system, UPI and its equivalent network in Singapore, PayNow have been integrated to enable faster remittances between the two countries. It will pave the way for seamless cross-border transactions between the two countries. Also, RBI’s partnership with the Monetary Authority of Singapore (MAS) will bring together extensive resources which will aid India’s fintech growth.

Significance of the UPI-PayNow Linkage

Singapore is the first country with which a cross-border Person to Person (P2P) payment facility has been launched by India. The project to link both the fast payment systems was initiated in 2021. 

• The UPI-PayNow linkage will especially help the Indian diaspora, such as migrant workers, students, and businessmen in Singapore. There are approximately 3.5 lakh people of Indian origin residing in Singapore which is about 9% of its population. 
• The integration of the system will bring down the cost of sending remittances by about 10%.
• The UPI-PayNow linkage will facilitate faster, more efficient and transparent cross-border transitions related to trade, travel and remittances between the two countries.
• The remittance flows in India mostly from the Middle East, the U.S., Europe, and Singapore and in the year 2022, it touched 100 billion dollars. The annual cross-border remittances are more than 1 billion dollars between India and Singapore. The integration between UPI-PayNow will enable an increased volume of remittance traffic. 
• Cross-border retail payments are generally less transparent and more expensive than domestic transactions. 
• The UPI-PayNow linkage closely aligns with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments.

United Payments Interface (UPI)

India has emerged as one of the fastest-growing ecosystems for fintech innovation. India’s UPI is one of the most successful electronic payment systems globally.

• UPI has grown by leaps and bounds. In 2022, the UPI processed over 74 billion transactions, worth Rs 125.94 trillion, NPCI (National Payments Corporation of India) data showed. The platform had processed over 38 billion transactions worth Rs 71.54 trillion in 2021.
• UPI was launched in 2016 and is an instant real-time payment system developed by the National Payments Corporation of India which is governed by RBI. The interface facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions. 
• UPI has made digital transactions so easy that even a person who otherwise is not digital savvy can effectively use it. 
• With PhonePe’s UPI International, Indian users can already make UPI payments in UAE, Bhutan, Nepal and Singapore where merchants (P2M) have a local QR code; the linkage with PayNow will make UPI more universally acceptable across the nation. 
• The RBI also launched UPI-based payment transactions for feature phone users. With this mode of digital payments, individuals will be able to make direct payments to others via UPI through feature phones also. Earlier, the UPI payment facility was restricted to only smartphone users with internet connections.

Foreign Travellers can pay through UPI

The Central Bank announced that all international travellers visiting India will be able to make local payments using UPI while they are in India.

• At first, it is available to travellers from G20 nations at select international airports. Eligible travellers would be issued Prepaid Payment Instruments (PPI) wallets linked to UPI for making payments at merchant outlets. It is a great move to further scale up digital transactions in India.

Conclusion – India’s robust digital payment infrastructure offers the country a great opportunity to leverage its fintech capabilities and push for leadership in this area. 

Read previous AIR Spotlight articles in the link.

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