With the launch of the cross-border linkage between India and Singapore using their respective fast payment systems – Unified Payments Interface (UPI) and PayNow, Prime Minister Narendra Modi, Reserve Bank of India (RBI) Governor Shaktikanta Das and Prime Minister Lee Hsien Loong of Singapore have joined forces.
Through token transactions, the facility was established with the help of the UPI-PayNow linkage, with which users of either fast payment systems can conveniently, safely, instantly, and cost-effectively transfer funds across borders using their mobile apps.
A UPI-ID, mobile number, or Virtual Payment Address (VPA) can be used to transfer funds between Indian bank accounts and e-wallets. The State Bank of India, Indian Overseas Bank, Indian Bank, and ICICI Bank will facilitate inward and outward remittances, whereas Axis Bank and DBS India will handle inward remittances.
Users of the service in Singapore will be able to access it through DBS-Singapore and Liquid Group (a non-bank financial institution). The authorities have said that they will add more banks to the linkage in the future.
An Indian user can initially send up to Rs 60,000 (about $1,000 SGD) every day. For the user’s convenience, the system will dynamically compute and show the amount at the moment of the transaction in both currencies.
In September 2021, a proposal to connect UPI with PayNow in Singapore was unveiled with the goal of making retail payments between India and Singapore more transparent and affordable than domestic transactions. The RBI, the Monetary Authority of Singapore, the Payment System Operators of both countries – NPCI International Payments Limited and Banking Computer Services Pte Ltd – as well as participating banks and non-bank financial institutions, worked closely together to create the UPI-PayNow linkage. This would allow citizens of both nations to send cross-border remittances more quickly and affordably.
The launch coincides with India’s G20 presidency this year. Instant and inexpensive money transfers from Singapore to India, and vice versa, would also benefit the Indian diaspora in Singapore, particularly migrant workers and students. It will be a crucial turning point in the construction of the infrastructure for international transactions between the two countries.
Prime Minister Modi has declared UPI-PayNow to be a new turning point in bilateral ties. Congratulating Indians and Singaporeans, he stated, “The linkage of Unified Payments Interface (UPI) and PayNow is a new milestone in India-Singapore relations and its launch is a gift to the citizens of the two countries.”
“In today’s era, technology connects us in several ways. Fintech is a sector that connects people to each other. Normally, it is confined within the boundaries of one country. But today’s launch has started a new chapter of cross-border Fintech connectivity,” said the prime minister. He added, “This will especially benefit our diaspora, professionals, students, and their families.”
“UPI is the most preferred payment mechanism in India. Many experts are estimating that digital wallet transactions are going to soon overtake cash transactions,” he said further.
According to PM Modi, UPI processed 74 billion transactions worth more than Rs 126 trillion, which is roughly 2 trillion Singapore dollars, in 2022.
Market players have welcomed the initiatives. “We welcome UPI-PayNow real-time payment systems linkage between India and Singapore, which will enable low-cost, instantaneous, and 24×7 fund transfer. We will continue to innovate to ensure support and earliest availability of such UPI-based cross-border payments for all,” a Paytm representative told News18.
According to Mehul Mistry, global head of strategy, digital financial services, and partnerships at Wibmo, Singapore is one of the top four inbound remittance markets. It accounts for around 5.7 percent of all remittances to India, or approximately $5.08 billion of the overall inward remittance market of $100 billion.
“This initiative will have several advantages such as customers outside India (in Singapore) will experience world-class payment infrastructure. This will witness the globalisation of India’s best-in-class digital payment infrastructure,” he said. According to Mistry, residents of both countries will be able to make faster and more cost-effective money transfers between their countries and make merchant payments using QR code scanning services.
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