Context: India’s Unified Payments Interface (UPI) and Singapore’s PayNow have been recently integrated.
More on UPI-PayNow Integration News
- UPI Integration: To enable faster remittances between India and Singapore, India’s retail payment system, UPI, and its equivalent network in Singapore, PayNow, have been integrated.
- Singapore has now become the first country with which cross-border Person to Person (P2P) payment facilities have been launched.
- Process: The PayNow-UPI linkage is the world’s first such linkage featuring cloud-based infrastructure and participation by non-bank financial institutions.
- It will allow users of the two quick payment systems in either nation to send money across borders quickly, securely, and affordably via their respective mobile apps.
- It is possible to send or receive money from India using only a UPI-id, cellphone number, or Virtual Payment Address for money held in bank accounts or e-wallets (VPA).
- Additional information such as bank account number, IFSC code are not required.
- Benefits: This linkage will allow users from both countries to access faster and more cost-efficient cross-border remittances.
- Eligibility for Remittances: Currently, participating banks in India for receiving remittances through the UPI-PayNow interlinkage are:
- Axis Bank
- DBS Bank India
- ICICI Bank
- Indian Bank
- Indian Overseas Bank
- State Bank of India
What are Unified Payments Interface (UPI) and PayNow?
- UPI: UPI or Unified Payments Interface, developed by National Payments Corporation of India (NPCI), is a quick payment method that enables the instantaneous transfer of funds through a mobile phone.
- Through the creation of a Virtual Payment Address (VPA), the risk of sharing bank account details is eliminated.
- The real-time system supports both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments.
- PayNow: It is a fast payment system in Singapore.
- It enables peer-to-peer funds transfer service, available to retail customers through participating banks and Non-Bank Financial Institutions (NFIs) in Singapore.
- It allows users to send and receive instant funds from one bank or e-wallet account to another in Singapore by using just their mobile number, Singapore National Registration Identity Card (NRIC)/Foreign Identification Number (FIN), or VPA.
Advantages of this Linkage
- Low- Cost Money Transfer: The UPI-PayNow Linkage will enable users of each of the two fast payment systems to make instant, safe, convenient, quick, low-cost fund transfers on a reciprocal basis without a need to get on board the other payment system.
- This linkage will reduce the remittance cost by 10%.
- This move will also bolster the trade and remittance flow between the two countries.
- Facilitate Indian Diaspora: This Linkage will help the Indian diaspora in Singapore, especially migrant workers/students.
- Interoperability: There will be interoperability of the two digital payment networks, allowing seamless remittances between the two countries at a highly competitive rate.
- Boost Tourism and Business: This integration will also help Indian tourists pay in Singapore using UPI. It will benefit the individuals and businesses in both the countries.
- Digital Connectivity: The link between the two systems also paves the way for establishing more comprehensive digital connectivity between the two countries.
- Less Dependence on SWIFT: A global real-time linkage of the payment systems reduces the dependency on the SWIFT network, thereby optimizing time and resources and enhancing cross-border remittance.
- Incentive for Innovators: This Linkage will create an enabling environment for innovators and regulators to accelerate the delivery of effective digital payments solutions.
How will India Benefit?
- Financial Inclusion: This is a testimony to India’s growth as the digital payments superpower, further it fosters an ecosystem for financial inclusion and digital India goals.
- Aid India’s FinTech Growth: RBI’s partnership with the Monetary Authority of Singapore (MAS) brings together extensive resources which will aid India’s FinTech growth.
- India and ASEAN: This will also establish a significant foundation for cross-border payments between India and ASEAN countries, creating a favorable environment for digital payments beyond borders.