India, Singapore to link payment systems to allow easier cross-border transactions
India and Singapore are reportedly working on linking their digital payment systems to allow “instant, low-cost fund transfers” in cross-border transactions between the two countries. These transactions between India and Singapore amount to more than $1 billion each year. As TechCrunch reports, the project to link India Unified Payments Interface (UPI) with Singapore’s PayNow should become operational by July 2022 as central banks of both countries announced on Tuesday. Once this is operational, users on either of the systems will be able to make transactions with the other without having to sign up on 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,” Monetary Authority of Singapore (MAS) explained in a press statement.
India’s UPI is a five-year-old payments infrastructure that has been developed by a coalition of retail banks. It has now become the most popular way for many users to transfer money to each other and to businesses. Adopted by many local and global firms including the likes of Facebook and Google, UPI is now processing more than 3 billion transactions every month, according to reports.
On the other hand, Singapore’s PayNow also brings interoperability between banka and payment apps and allows users on one payment app to make transactions with the other apps.
A report by Citi states that nearly 250 million people send over $500 billion in cross-border remittances annually, across the globe. “The fees are extremely high. It is embarrassing that we have not solved this issue so far,” Citi analysts wrote in the report. As per reports, the global average cost for sending money is around 6.5%. The RBI and the MAS have not revealed the cross-border fees that they would charge their users.
India’s central bank RBI described the project as a “significant milestone in the development of infrastructure for cross-border payments” between India and Singapore in their press release and said 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 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.”