The fintech confirmed that it is going to extend support for UPI international payments in the following regions: the UAE, Singapore, Mauritius, Nepal, and Bhutan, enabling users to carry out payments in foreign currency straight from their Indian bank, just like when using international debit cards.
The implementation of this solution is believed to be PhonePe’s attempt at capturing a portion of the forex market, a category that is thought to be a clear method for payments apps to increase their revenue, as per fintech industry executives that are not affiliated with the company, states TechCrunch.
PhonePe’s move is also lined up with NPCI’s vision, the body overseeing UPI payments, which has the belief that within 2023, Indians in a multitude of foreign cities, including Dubai, will not have a need to leverage any other payment methods, according to one of the fintech executives.
As detailed in the announcement, other fintech apps are also expected to have cross-border UPI support added in the months to come as UPI, built by a coalition of retail banks in India, is the most predominant way leveraged by Indians to transact online, having processed over 8 million transactions in January 2023 alone. Furthermore, UPI international is on NPCI’s current roadmap.
One of the key challenges of India’s NPCI is thought to be onboarding merchants to accept UPI payments in foreign markets, as without merchants, PhonePe together with other India-based UPI payment apps will not be enabled to carry out any payments. Preferably, the acquiring side of UPI players would need to partner with either local payments processors or aggregators that can have support for UPI extended at scale amongst local merchants. Although in India UPI QRs are ubiquitous, this is not necessarily the case elsewhere, advises TechCrunch.
The announcement does not mark the first instance where mobile payments apps have looked to serve their home users from international markets, with WeChat Pay and Alipay providing similar services to their customers in a multitude of countries. However, even when talking about China-based players, merchants’ acceptance has been proven to be the most predominant challenge overseas.
Valued at USD 12 billion, PhonePe is the most popular UPI app in the region, commanding more than 50% of the market share. However, as UPI does not currently have a business model, participant players are found in the position of having to look at other avenues to increase their revenue.
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