The World is Shrinking: Thanks to UPI

Linking of UPI with Singapore’s PayNow marks a red-letter day for the domestic banking and financial sector and will be a precursor to cross-border digital payment linkages between India and the rest of the world, going ahead

India might have been late in adopting technology in the banking and financial space but it is catching up fast. Instant real-time payment interface UPI or Unified Payments Interface has been one of the most innovative digital payment modes the world has seen in recent times. A pilot was conducted with (National Payments Corporation of India) NCPI’s 21-member banks in April 2016 and as they say, the rest is history.

NCPI is an initiative of the Reserve Bank of India and is an umbrella organization for operating retail payments and settlements in India.

UPI is unique in the sense that it is a single mobile application accessing different bank accounts.

The linking of UPI with Singapore’s PayNow marked a red-letter day for the Indian banking and financial sector and will be a precursor to cross border digital payment linkages between India and the rest of the world, going ahead.

In a first, a person-to-person cross-border real-time monetary transfer was performed between RBI Governor Shaktikanta Das and the Monetary Authority of Singapore’s (MAS) Managing Director Ravi Menon via smartphones as token remittances to each other.

In another first, the PayNow-UPI project is also the world’s first real-time payment systems linkage to use a scalable cloud-based infrastructure according to the claims made by MAS. The linkage can accommodate future increases in the volume of remittance traffic, going by the official statement.

Instant cross-border payments can now be made between residents in the two counties. Initially, six banks will provide inbound remittance services to their account-holders while four banks will allow the outward transferon the India side.

Similar banking arrangements have been made at the Singapore side too.

UPI-PayNow aims to hit several birds with one stone. The most important deliverable is the turnaround time which will become almost negligible with instant transfers of money. It will also ensure safety of transactions being made form the two countries and minimize the cost of transactions.

There will also be indirect benefits like the trade and tourism industries in both the countries will benefit, promoting ease of doing business. There will be no requirement of carrying cash or visiting banks to get foreign exchange. Since the transactions will be real time, the exchange rates will be real time as well.

UPI Expansion

Indian digital payment systems are now available in Singapore, UAE, Oman, Saudi Arabia, Malaysia, France, Belgium, the Netherlands, Luxembourg and Switzerland, among others. During the G20 digital economy working group meeting in Lucknow, Union Minister Ashwini Vaishnaw revealed that India had signed MoUswith 13 countries that want to adopt the UPI interface for digital payments, and that Singapore had completed its UPI integration.

UPI is an immensely popular payment tool and Indians living abroad will be able to make use of this service as its penetration grows in other countries.

While users will gain from its seamless services, the application will also gain from presence of Indian diaspora across the world.

In February, the Reserve Bank of India had proposed to permit India-bound foreign travelers to use UPI for retail payments (peer-to-merchant or P2M transactions).Initially, this facility is being availed to travelers from G20 countries arriving at select international airports of India. The countries included Argentina, Australia, Brazil, Canada, China, France, Germany, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States of America, and the European Union.

UPI Payments Growth

In India, the UPI has revolutionized in how people transact on a day-to-day basis. It is hugely popular among people from all walks of life because – one it is hassle free and two, it allows low ticket transactions bringing it to the reach of rich and not-so-affluent, alike.

Smartphones and internet have made the world a smaller place. In India, the adoption of technology has been pretty quick because the government and the business sector have been designing solutions which are easy to use by all and sundry. One does not have to be highly skillful or educated to use smartphones or payment solutions.

The traction for UPI has been on the upside over the past one year and barring a couple of occasions it has grown month-on-month. In January 2023, UPI recorded 803 crore transactions worth Rs 12.98 lakh crore, which is unprecedented for it.

In percentage terms, the highest value and volume growth was recorded in March 2022. The transaction volume grew over 16 per cent while the value went up by 20 per cent.

India’s banking and financial systems are coming of age. They are using technology not just to provide seamless services and increase penetration but to clean their books and make them robust.

UPI has cut the clutter of traditional transactions modes and it can go a long way in helping the world transacts seamlessly too.

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