UPI as an Alternative to Swift [UPSC Current Affairs]

In May 2023, Japan expressed interest in joining the Unified Payment Interface (UPI) system. Earlier many other rich countries also expressed interest in joining the system. In this article, you can read more about this development and also the possibility of India’s UPI acting as an alternative to SWIFT. This topic is relevant for the IAS exam economy as well as IR segments.

UPI as an Alternative to Swift

The Swift system is the world’s leading provider of financial messaging services and it would seem the indigenously developed UPI can replace Swift with its increasing global appeal.

• Japan is the latest country to seriously consider joining the UPI system for improving interoperability. In the future, Unified Payment Interface (UPI) can become standard for cross-border payment systems as an alternative to Swift systems.
• It is important to note that digital payment systems like UPI and/or RuPay are available for Indians travelling to countries such as Singapore, Nepal, Bhutan and the United Arab Emirates (UAE). 
• For non-resident Indians (NRIs), there are 10 countries which allow making payments (UPI) through their local phone numbers, including Australia, Canada, the UAE, Oman, Qatar, Singapore, Hong Kong, the UK and the US.
• India is currently working with 19 countries, most of which are developed countries in Europe that are adopting a similar system to UPI.
• In Japan, UPI got a patent and Japan is also recognising the Indian digital stack like UID, for its citizens.
• In global forums such as G20, SCO (Shanghai Cooperation Organisation) and G7, the Digital India Mission is getting good attention.

What is Unified Payment Interface (UPI)?

• UPI is a real-time payment system that helps in the instant and quick transfer of funds between two bank accounts. The transfer of funds is done through a single mobile application. 
• Some important features of UPI are:
  • Immediate transfer of money is available all the time.
  • Different bank accounts can be accessed through a single mobile application.
  • The virtual address of the customer for Pull & Push provides incremental security with the customer not required to enter the details such as card no, account number, IFSC, etc.
  • Single Click 2 Factor Authentication – Aligned with the Regulatory guidelines, yet provides for a very strong feature of seamless single click payment.

Read more on Unified Payment Interface (UPI) in the linked article.

UPI as an Alternative to Swift:- Download PDF Here