India and Singapore connect UPI and PayNow to facilitate cross-border payments

The linkage between the two systems went live on 20 February 2023. Eight banks, including DBS, Liquid Group, Axis Bank, and State Bank of India from Singapore and India are currently participating in the collaboration. Citizens in each nation can use their local payments systems to send money to those in the foreign land in real time. For now, an Indian user can remit up to USD 747 a day, the Reserve Bank of India said.

Facilitating transactions between the two countries

The two nations announced their plan to link their payments systems in 2021 and had originally set a deadline of July 2022 to go live with the collaboration. The PayNow-UPI linkage is India’s first cross-border, real-time system linkage and Singapore’s second. It’s also one of the world’s first such linkage feature on cloud-based infrastructure and with participation by non-bank financial institutions.

RBI’s officials stated that as they progressively add more users and use cases, the PayNow and UPI linkage will grow in utility and contribute more to facilitating trade and people to people links. UPI, a seven-year-old payments infrastructure developed by a coalition of retail banks, has become one of the most popular ways Indians transact online.

The system, adopted by scores of local and global firms including Walmart, Google and Facebook, processes over 8 billion transactions a month. Like UPI, Singapore’s PayNow also offers interoperability between banks and payments apps in the nation, allowing users from one payment app to make transactions to those on other apps.

The remittance landscape

Nearly 250 million people across the world send over USD 500 billion in cross-border remittances annually, according to Citi. But the space is ripe for disruption. The fees are extremely high. It is embarrassing that we have not solved this issue so far, Citi analysts wrote. Global average cost for sending money is around 6.5%.

This announcement is the latest in an ongoing effort from New Delhi to launch and expand its tech infrastructure such as UPI and DigiLocker to other nations. India plans to use its ongoing presidency of the G20 forum to make presentations to other nations about its digital infrastructure.