The central banks of India and Singapore plan to link their digital payments systems to enable instant, low-cost fund transfers. The two sides will connect India’s Unified Payments Interface (UPI) and Singapore’s PayNow in a major push to disrupt the cross-border transactions between the two nations that amount to over US$1 billion each year.
The move is targeted for operationalisation by July 2022, both nation’s central banks said earlier this week. Users on either of the systems will be able to make transactions with one another without having to sign up to the second platform. 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, noted the Monetary Authority of Singapore in a press statement.
UPI is an instant real-time payment system that facilitates inter-bank transactions developed by the National Payment Corporation of India (NPCI). It has become the most popular way users in India transfer money to one another and to businesses, a news report stated. The system, adopted by scores of local and global firms, is now processing over 3 billion transactions each month. Singapore’s PayNow also enables peer-to-peer funds transfer service, available to retail customers through participating banks and non-bank financial institutions (NFIs). 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 NRIC/FIN, or VPA.
The Reserve Bank of India, the country’s central bank, described the project as a significant milestone in the development of infrastructure for cross-border payments between India and Singapore. It noted that the linkage 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 the Network for Electronic Transfers (NETS) to foster the cross-border interoperability of payments using cards and QR codes, between India and Singapore. It will further anchor trade, travel, and remittance flow between the two countries.
Earlier in August, India’s Prime Minister, Narendra Modi, launched a new digital payment system called e-RUPI. It is a QR code or SMS string-based e-voucher, which is delivered to the mobile of the beneficiaries. The users of this seamless one-time payment mechanism will be able to redeem the voucher without a card, digital payments app, or Internet banking access at the service provider. Any government agency and corporation can generate e-RUPI vouchers via their partner banks.
As OpenGov Asia reported, the e-RUPI initiative will be one of the programmes launched over the next few years to limit touchpoints between the government and the beneficiary and ensure that the benefits reach their intended beneficiaries in a targeted and leak-proof manner. The vouchers are person- and purpose-specific, which means that if they are released by the government COVID-19 vaccinations, for instance, then they can be redeemed only for that. It also ensures that the payment to the service provider is made only after the transaction is completed. Being pre-paid in nature, it assures timely payment to the service provider without the involvement of any intermediary. E-RUPI is expected to be a revolutionary initiative for ensuring a leak-proof delivery of welfare services.
