In a bid to make cross-border transactions easier and cheaper, the Reserve Bank of India and the Monetary Authority of Singapore (MAS) have announced a project to link their respective fast payment systems, UPI and PayNow, by July 2022.
The UPI-PayNow link will allow users to make instant, low-cost fund transfers on a reciprocal basis without the need to get onto any other payment system, the RBI said on Tuesday. Cross-border payments and remittance flows between India and Singapore exceed $1 billion each year currently.
PayNow is a fast payment system that enables peer-to-peer fund transfer by retail customers through participating banks and non-bank financial institutions (NFIs) in Singapore. UPI, on the other hand, has proved to be one of the most popular digital payment systems in India, clocking 355 crore transactions worth ₹6.39-lakh crore in August. It processes transactions valued at over ₹15,000 crore daily.
“The UPI-PayNow linkage builds upon the earlier efforts of NPCI International Private Limited (NIPL) and Network for Electronic Transfers (NETS) to foster cross-border interoperability of payments using cards and QR codes between India and Singapore and will further anchor trade, travel and remittance flows between the two countries,” the RBI said.
According to a statement by MAS, when implemented, fund transfers can be made from India to Singapore using mobile phone numbers, and in the other direction by using the UPI virtual payment addresses (VPA).
“The experience of making a PayNow transfer to a UPI VPA will be similar to that of a domestic transfer to a PayNow VPA,” the RBI said.
Industry players say it will lead to convenience for users, both individuals and businesses, including in investments, trade and travel. “The reduced time and charges for cross-border payments will help grow the trade between India and Singapore,” said Asheesh Chanda, Founder and CEO of Kristal.AI.
Currently, inter-bank charges of up to ₹3,000 are levied over and above the LRS processing fees by banks. This discourages small investors from accessing global markets as it eats into their returns, he added. NIPL has been working to promote the use of UPI overseas. It has partnered with cross-border digital payments provider Liquid Group to enable UPI QR-based payments acceptance in 10 markets across North and South-East Asia.
NIPL has also tied up with the Royal Monetary Authority of Bhutan for enabling and implementing BHIM UPI QR-based payments and has partnered with Mashreq to get UPI accepted in the UAE.