UPI must now rapidly go global

The linking of India’s Unified Payments Interface (UPI) with Singapore's PayNow recently was an important event in the development of cross-border digital payment linkages between India and other countries. Last week, Reserve Bank of India Governor Shaktikanta Das and the Monetary Authority of Singapore’s Managing Director Ravi Menon made token remittances to each other through mobile phones in the first person-to-person real-time monetary transfer cross-border. Individuals can now transfer money for a variety of purposes including “maintenance for a relative” or as a gift. Six banks in India will facilitate inbound remittances to their account-holders while four banks will enable the outward transfer of money. Banking arrangements have been made at the Singapore end also. Both countries have been working to put in place a safe and efficient money transfer system between them for some time. A smooth money transfer system will help the people of both countries.

The system has started on a small scale with the daily transaction limit set at Rs 60,000, or about Singapore Dollar (SGD) 1,000. The UPI-PayNow set-up is equipped to accommodate future increases in the remittance traffic. There are strong economic links between India and Singapore at the level of governments, businesses, institutions and individuals. Individuals have gone through time-consuming and even illegal channels for transfer of funds. The new linkage will lower the cost of remittances and make the transactions transparent. Cross-border retail payments and remittances between the two countries amount to over $1 billion annually. The remittances to India from abroad have been steadily increasing and there is the need to make them quick and hassle-free. The Indian diaspora accounts for about 9% of the population of Singapore. Singapore is among the countries with the highest per capita income. These are factors that will help the system to develop quickly and yield good results.

The India-Singapore linkage will work as a template for developing similar systems linking other countries. Singapore established a similar payment link with Thailand in 2021, and it is part of an initiative among other South-East Asian countries to link their domestic digital payment systems. India can also extend its system to other countries and benefit from the linkages. Facilitation of free flow of funds will benefit all sectors like trade and tourism and give a boost to investments. It is a basic requirement of ease of business. As the country’s profile as an economic and financial power is rising, there is the need to strengthen global linkages with the help of the best technological tools. The country has a working modern financial infrastructure and more external linkages need to be cultivated.