Prime Minister Narendra Modi and his Singapore counterpart Lee Hsien Loong witnessed the launch of cross-border linkage between Unified Payments Interface (UPI) and PayNow.

The facility was launched through token transactions by Reserve Bank of India Governor Shaktikanta Das and managing director of Monetary Authority of Singapore Ravi Menon using the UPI-PayNow linkage.

PM Modi expressed hope that digital transactions will soon surpass cash with UPI increasingly becoming the most preferred payment mechanism in the country. 

Significance of UPI-PayNow linkage

• Singapore is the first country with which cross-border Person-to-Person (P2P) payment facility has been launched.

• The idea of linking PayNow and UPI was first conceived in 2018, when Modi visited Singapore.

• Digital connectivity was also a key topic discussed at the inaugural India-Singapore Ministerial Roundtable (ISMR), which was held in New Delhi last September. 

• Cross-border retail payments and remittances between Singapore and India amount to over $1 billion annually.

• The linkage of UPI and PayNow is a new milestone in India-Singapore relations. This will help people of both the countries to do cross-border transactions through mobile phones in an affordable manner.

• This will help the Indian diaspora in Singapore, especially migrant workers/students and bring the benefits of digitalisation and fintech to the common man through instantaneous and low-cost transfer of money from Singapore to India and vice-versa.

• The linkage will enable users of the two fast payment systems in either country to make convenient, safe, instant, and cost-effective cross-border fund transfers using their respective mobile apps.

• The UPI-PayNow linkage is the product of extensive collaboration between the RBI, Monetary Authority of Singapore (MAS), and Payment System Operators of both countries — NPCI International Payments Limited (NIPL) and Banking Computer Services Pte Ltd (BCS), and participating banks/non-bank financial institutions.

• This interlinkage aligns with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments and will be a significant milestone in the development of infrastructure for cross-border payments between India and Singapore.

How it works?

• Funds held in bank accounts or e-wallets can be transferred to or from India using just the UPI-id, mobile number, or Virtual Payment Address (VPA).

• To begin with, the State Bank of India, Indian Overseas Bank, Indian Bank and ICICI Bank will facilitate both inward and outward remittances, while Axis Bank and DBS India will facilitate inward remittances.

• For Singapore users, the service will be made available through DBS-Singapore and Liquid Group (a non-bank financial institution). More banks will be included in the linkage over time.

• Customers of the above participating banks can undertake cross-border remittances to Singapore using the bank's mobile banking app or internet banking.

• An Indian user can remit up to Rs 60,000 in a day (equivalent to around SGD 1,000). At the time of making the transaction, the system shall dynamically calculate and display the amount in both currencies for the convenience of the user.

Unified Payments Interface (UPI)

• Before 2016, India used a number of different systems to transfer money between banks. The traditional forms included RTGS, IMPS and NEFT. With the plethora of systems, rules and growing paper burden, there was a need for a unified system that could automate and standardise India’s payment platforms.

• In 2016, the National Payments Corporation of India (NPCI) set out with a mandate to change the face of India’s payment systems. It developed the Unified Payments Interface (UPI) as an architecture framework with a set of standard Application Programming Interface (API) specifications to facilitate online payments. 

• The aim was to simplify and provide a single interface across all NPCI systems, thereby creating interoperability and a superior customer experience.

• The pilot programme, with 21 member banks, was launched on April 11, 2016.

• The UPI 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 into one hood. 

• It also caters to the “peer to peer” collect request which can be scheduled and paid as per requirement and convenience. 

• It facilitates immediate money transfer through mobile devices round the clock.

• The Reserve Bank has allowed credit cards to be linked with the Unified Payments Interface (UPI), which will enable more people to make payments using the popular platform.

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