Monday , October 18 2021
Home / Amol Agrawal: Mostly Economics / India’s UPI and Singapore’s PayNow to Link in 2022

India’s UPI and Singapore’s PayNow to Link in 2022

Summary:
As central banks and other experts think/work on using CBDCs for crossborder transfers (this too), there could be other interesting ways. India and Singapore have decided to link their local digital payments for crossborder transfers. From RBI: The Reserve Bank of India (RBI) and the Monetary Authority of Singapore (MAS) announce a project to link their respective fast payment systems viz. Unified Payments Interface (UPI) and PayNow. The linkage is targeted for operationalisation by July 2022. 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 onboarded onto the other payment system. The UPI-PayNow linkage is a significant milestone in the development of infrastructure

Topics:
Amol Agrawal considers the following as important:

This could be interesting, too:

Amol Agrawal writes Denmark Central Bank’s Gold – A historical overview

Amol Agrawal writes Should Keynes’s General Theory book have been titled instead as ‘Special Theory of Employment, Interest and Money’?

Amol Agrawal writes The Fed’s Evolving Involvement in the Repo Markets

Amol Agrawal writes Reserve Bank of NZ adds two more assistant governors for addressing new challenges

As central banks and other experts think/work on using CBDCs for crossborder transfers (this too), there could be other interesting ways.

India and Singapore have decided to link their local digital payments for crossborder transfers. From RBI:

The Reserve Bank of India (RBI) and the Monetary Authority of Singapore (MAS) announce a project to link their respective fast payment systems viz. Unified Payments Interface (UPI) and PayNow. The linkage is targeted for operationalisation by July 2022.

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 onboarded onto the other payment system.

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 linkage builds upon the earlier efforts of NPCI International Private Limited (NIPL) and Network for Electronic Transfers (NETS) to foster cross-border interoperability of payments using cards and QR codes, between India and Singapore and will further anchor trade, travel and remittance flows between the two countries. This initiative is also in line with RBI’s vision of reviewing corridors and charges for inbound cross-border remittances outlined in the Payment Systems Vision Document 2019-21.

UPI is India’s mobile based, ‘fast payment’ system that facilitates customers to make round the clock payments instantly using a Virtual Payment Address (VPA) created by the customer. This eliminates the risk of sharing bank account details by the remitter. UPI supports both Person to Person (P2P) and Person to Merchant (P2M) payments as also it enables a user to send or receive money.

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 (NFIs) 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.

From Monetary Authority of Singapore:

The Monetary Authority of Singapore (MAS) and the Reserve Bank of India today announced plans to link Singapore’s PayNow and India’s Unified Payments Interface (UPI) real-time payment systems by July 2022.

2. The PayNow-UPI linkage will enable users to make instant, low cost fund transfers directly from one bank account to another between Singapore and India. When implemented, fund transfers can be made from India to Singapore using mobile phone numbers, and from Singapore to India using UPI virtual payment addresses (VPA). The experience of making a PayNow transfer to a UPI VPA will be similar to that of a domestic transfer to a PayNow VPA [1] . 

3. The linkage will provision for increased volumes of remittance traffic, multi-entity participation, automation of capital control rules, and enriched message formats to accommodate future innovation by linkage participants. These enhancements constitute a significant upgrade to the design of cross-border payment systems today.

4. The connectivity between PayNow and UPI is a major milestone in the development of next-generation infrastructure for cross-border payments between Singapore and India, and is closely aligned with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments. The PayNow-UPI linkage builds upon the earlier efforts of NETS and NPCI International Payments Limited (NIPL) to foster cross-border interoperability of card and QR payments [2] , and will further anchor the substantial trade, travel and remittance flows between the two countries. 

5. Sopnendu Mohanty, Chief FinTech Officer of MAS, said, “By reducing the cost and inefficiencies of remittances between Singapore and India, the PayNow-UPI linkage will directly benefit individuals and businesses in Singapore and India that greatly rely on this mode of payment. Given that PayNow and UPI are integral components of their respective national digital infrastructures, the link between the two systems also paves the way for establishing more comprehensive digital connectivity and interoperability between the two countries.” 

This is quite a development. The Indian and Singapore domestic payment systems will now talk to each other and allow transfers. There will be execution challenges and most of them must have been already been thought by the authorities.

Payment systems have suddenly become such an exciting space for research..

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

Leave a Reply

Your email address will not be published. Required fields are marked *