India’s real-time retail payment system Unified Payments Interface (UPI), which has allowed for quick digital payments through apps like BharatPe and Paytm, and its equivalent network in Singapore called PayNow, were integrated today to enable faster remittances between the two countries at a competitive rate.
Reserve Bank of India’s Governor Shaktikanta Das and the Monetary Authority of Singapore’s (MAS) Managing Director Ravi Menon launched the new linkage, in the presence of Prime Minister Narendra Modi and Singapore’s Prime Minister Lee Hsien Loong.
What are UPI and PayNow?
Unified Payments Interface (UPI) is India’s mobile-based fast payment system, which facilitates customers to make round-the-clock payments instantly, using a Virtual Payment Address (VPA) created by the customer. It eliminates the risk of sharing bank account details by the remitter. UPI supports both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments and it also enables a user to send or receive money.
PayNow 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.
What is the UPI-PayNow linkage?
Cross-border retail payments are generally less transparent and more expensive than domestic transactions. The UPI-PayNow linkage is a significant milestone in the development of infrastructure for cross-border payments between India and Singapore and closely aligns with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments.
India is chairing the G20 on basis of the rotational membership structure this year. Singapore, although not a G20 member, has been invited to participate in the G20 Summits and its related processes from 2010 to 2011 and from 2013 to 2023.
The project to link both the fast payment systems was initiated in September 2021 to facilitate faster, more efficient and transparent cross-border transactions relating to trade, travel and remittances between the two countries.
How will it benefit the citizens of both countries?
The UPI-PayNow linkage will enable users of each of the two fast payment systems to make instant, low-cost fund transfers on a reciprocal basis without a need to get on board the other payment system.
It will also help the Indian diaspora in Singapore, especially migrant workers and students, through the instantaneous and low-cost transfer of money from Singapore to India and vice-versa. Of the total inward remittances to India in 2020-21, the share of Singapore stood at 5.7 per cent, according to the RBI Remittance Survey, 2021.