By making cross-border transactions quick and seamless under its Unified Payment Interface, India is showing the way globally in digital payments
BY KUMUD DAS
India’s UPI (Unified Payment Interface) going international is a major initiative that augurs well for the digital payment ecosystem. It is set to play a crucial role for the country which has taken over the presidency of the G20 countries that are responsible for 85 percent of the global GDP.
UPI, managed by the National Payments Corporation of India (NPCI), is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing and merchant payments under one hood.
According to the Reserve Bank of India (RBI), banks and non-banks authorised to issue prepaid payment instruments (PPIs) can issue rupee-denominated full-KYC PPIs to foreign nationals and NRIs visiting India. Such PPIs can also be issued in co-branding arrangement with entities authorised to deal in foreign exchange under the Foreign Exchange Management Act (FEMA).
The PPIs can be issued in the form of wallets linked to UPI — such as Google Pay and PhonePe — and can be used for merchant payments (P2M) only. Loading and reloading of such PPIs will be against receipt of foreign exchange in cash or through any payment instrument.
The NPCI has issued new guidelines allowing NRIs in 10 countries to access UPI services using their international mobile numbers. The UPI on-boarding and transaction facility being extended to Non-Resident account types like NRE/NRO is set to be a game changer. NRIs living in these 10 countries, including Singapore, Australia, Canada and the United Kingdom, can make payments from their international mobile numbers.
The PPIs can be issued after physical verification of the passport and visa of the customer at the point of issuance. PPI issuers will only have to ensure that such information and record thereof are maintained with them. The conversion to Indian rupees can be carried out only by entities authorised to deal in foreign exchange under FEMA. The amount outstanding at any point of time in such PPIs should not exceed the limit applicable on full-KYC PPIs.
Anand Kumar Bajaj, founder, MD and CEO, PayNearby, says, “The UPI facility on international numbers will allow NRE/NRO account holders to experience easy, seamless and instant transactions.”
Further, the NPCI’s efforts to boost the uptake of UPI globally will make it a preferred choice of NRIs for making payments in India, thus providing the necessary thrust to digital payments, says Bajaj.
Until now, NRIs could not access the UPI network since SIM binding, which is an important security feature of UPI, was available only for Indian SIM cards. Now, SIMs from many countries can be used, which will service the huge pending demand among NRIs.
They can now use UPI on their existing mobile phones in the countries where they live. This will not only help them use it when they travel to India; when UPI comes to merchants in the country of their residence they can start making instant transfers. NRIs will just need to link their NRE and NRO accounts linked to their international SIM to UPI and use it like any other Indian UPI for merchant payment as well as peer-to-peer payment.
“Other than the 10 countries, we hope this facility will soon be available for NRIs residing in other nations as well,” said Mandar Agashe, founder MD and VC of Sarvatra Technologies.
As Prime Minister Narendra Modi has said, Indian expats are our brand ambassadors or rashtra doots on foreign soil. “I believe in the long run our NRIs, rashtra doots, will play a vital role in increasing the adoption and popularity of Indian payment technology — UPI — on foreign soil and truly make UPI a global payment and money transfer network,” he said.
Vishwas Patel, chairman, Payments Council of India, and executive director, Infibeam Avenues, says, “It is a far-sighted move, a move that will really benefit NRIs.”
The major convenience factor will be in the form of payment/money transfer convenience for NRIs when they visit India, their motherland. They will be able to pay easily to millions of Indian merchants. Thus, they will be able to do away with their expensive international cards, Patel pointed out.
Though not a G20 member, Singapore was invited to participate in the G20 summits and related processes over 2010-11 and again from 2013 to 2023.
Singapore Prime Minister Lee Hsien Loong had said that the linkage between India’s UPI and Singapore’s PayNow would allow people in the two countries to undertake faster and cost-efficient digital transfers, and expressed hope that this “strong partnership” would continue to spawn innovative technology solutions.
Cross-border retail payments and remittances between Singapore and India amount to over US$1 billion annually. The PayNow-UPI linkage is the world’s first real-time payment systems linkage using a scalable cloud-based infrastructure which can accommodate future increases in the volume of remittance traffic, according to an MAS release.
About 74 billion transactions amounting to more than `126 trillion, which is approximately 2 trillion Singapore dollars, were done through UPI in 2022.
According to Shanti Lal Jain, MD and CEO of Indian Bank, “Enabling UPI for inbound travellers to India will showcase the potential of UPI to the world and promote a cashless economy.”
Dilip Modi, founder, Spice Money, added, “UPI has been a game changer for India and this will only highlight to the world that India is leading the way in terms of technology developments.”
UPI has become ubiquitous in the country due to its simple, fast, secure and convenient method of transacting.
Recalling the launch of UPI in 2016, Bharat Panchal, former head, risk management, NPCI, says, “It took more than a month for us at NPCI in 2016 to see UPI transactions crossing the mark of 1 million.”
Panchal goes on, “There is no product like UPI in any part of the world as of now.” On the rupee’s being yet to become fully convertible, Panchal said, “I don’t think there is any bottleneck in the absence of the rupee’s becoming fully convertible as cross-border transactions are settled in US dollars and a few other currencies.”
India continues to be the country with the biggest inward remittance in the world. Earlier, it used to take two days for remittance to take place. By enabling UPI for cross-border transactions, this time can be reduced drastically.
(The writer is a Mumbai-based senior business journalist.)