The Reserve Bank of India (RBI) on Tuesday said it is working on a project with the Monetary Authority of Singapore to link the Unified Payments Interface (UPI) with the city-state’s fast payments system PayNow. The linkage is targeted to be operational by July 2022.
The linkage will enable users of each payment system to make instant, low-cost fund transfers on a reciprocal basis without getting on board the other system, the Indian central bank said.
“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,” the RBI said.
The linkage builds upon the earlier efforts of NPCI International (NIPL) and Network for Electronic Transfers (NETS) to foster cross-border interoperability of payments using cards and QR codes between India and Singapore. The linkage will further anchor trade, travel and remittance flows between the two countries, the RBI said.
The initiative is also in line with the RBI’s vision of reviewing corridors and charges for inbound cross-border remittances outlined in the Payment Systems Vision Document 2019-21. In that document, released in May 2019, the RBI had observed that the cost of remitting funds is increasingly becoming a key element influencing the size of remittances.
“High cost of remittance made through formal channels may drive customers to informal channels, which are less secure and prone to misuse,” it had said in the document, adding that it would examine the role that payment services providers can play to ensure friction-free remittances at lower cost.
UPI is India’s mobile-based payment system that facilitates customers to make round-the-clock payments instantly and directly from their bank accounts using a virtual payment address (VPA) created by the customer. In August, UPI clocked over 3.5 billion transactions worth Rs 6.39 lakh crore.
PayNow is the fast payment system of Singapore which enables peer-to-peer funds transfer service, available to retail customers through participating banks and non-bank financial institutions in Singapore. It enables 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 NRIC/FIN or VPA. The platform has seen over 4.9 million registrations, as on January 3, according to the Association of Banks in Singapore.