India, Singapore Announce Linking of UPI and PayNow Fast Payment Systems

India, Singapore Announce Linking of UPI and PayNow Fast Payment Systems

In a major effort to disrupt the over $1 billion in annual cross-border transactions between India and Singapore, the two countries are working to link their digital payment systems to enable “instant, low-cost fund transfers.”

The project to link India’s Unified Payments Interface (UPI) and Singapore’s PayNow is expected to be operational by July 2022, according to both countries’ central banks. Users on either platform will be able to send money to each other without having to sign up for the other, according to the banks.

“Fund transfers can be made from India to Singapore using mobile phone numbers, and from Singapore to India using UPI virtual payment addresses once the system is up and running” (VPA). Making a PayNow transfer to a UPI VPA will be similar to making a domestic transfer to a PayNow VPA, according to a press release from the Monetary Authority of Singapore.

UPI: Popular Payment System in India

UPI, a five-year-old payments infrastructure developed by a group of retail banks, has become the most popular way for Indians to send and receive money.

The system, which has been adopted by a number of local and international companies, including Google and Facebook, now processes over 3 billion transactions per month. PayNow, like UPI, enables interoperability between banks and payment apps, allowing users of one app to make transactions with users of other apps.

According to a Citi report released earlier this year, nearly 250 million people around the world send over $500 billion in cross-border remittances each year. However, the environment is ripe for upheaval. “The fees are exorbitant. It’s embarrassing that we haven’t found a solution to this problem yet,” Citi analysts wrote. The average cost of sending money around the world is around 6.5 percent. The cross-border fees that the RBI and the MAS will charge their users were not disclosed.

The project is a “significant milestone in the development of cross-border payments infrastructure” between India and Singapore, according to India’s central bank, and it “closely aligns with the G20’s financial inclusion priorities of driving faster, cheaper, and more transparent cross-border payments.”

“The linkage builds on NPCI International Private Limited (NIPL) and Network for Electronic Transfers (NETS) earlier efforts to foster cross-border interoperability of payments using cards and QR codes between India and Singapore, and will help to further anchor trade, travel, and remittance flows between the two countries.”

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