India’s Unified Payments Interface (UPI) and Singapore’s PayNow were officially connected to allow a “real-time payment linkage”.
What are UPI and PayNow?
[A] Unified Payments Interface (UPI)
- UPI is India’s mobile-based fast payment system that allows customers to make round-the-clock payments instantly by using a Virtual Payment Address (VPA) that they create.
- It eliminates the risk of the remitter sharing bank account information.
- UPI allows users to send and receive money and supports both person-to-person (P2P) and person-to-merchant (P2M) payments.
[B] PayNow
- In Singapore, it is a quick payment system.
- It enables peer-to-peer funds transfer services, which are available to retail customers in Singapore through participating banks and Non-Bank Financial Institutions (NFIs).
- It enables users to send and receive instant funds in Singapore from one bank or e-wallet account to another using only their mobile number, Singapore National Registration Identity Card (NRIC)/Foreign Identification Number (FIN), or VPA.
- What is the relationship between UPI and PayNow?
- In general, cross-border retail payments are less transparent and more expensive than domestic transactions.
- The project to connect both fast payment systems was launched in September 2021 in order to facilitate faster, more efficient, and transparent cross-border transactions involving trade, travel, and remittances between the two countries.
Significance of the integration
- Improved cross-border transactions: The integration will make cross-border transactions between India and Singapore easier, reducing the need for intermediaries and their associated costs.
- Easier remittances: With the integration, Indian workers in Singapore will be able to send money back home to their families more easily.
- Increased trade and investment: The integration will make it easier for businesses in both countries to conduct transactions, potentially increasing trade and investment.
- Diplomatic ties will be strengthened: The integration is expected to strengthen diplomatic ties between India and Singapore.
How does the integration function?
- The integration is enabled by the use of standardised QR codes.
- Users will be able to transfer funds between the two systems in real time, eliminating the need for intermediaries.
Prospects for the Future
- Additional integrations: The success of the UPI-PayNow integration could pave the way for other countries to implement similar integrations.
- Increased adoption of digital payments: The integration is expected to promote digital payment adoption in both India and Singapore, potentially reducing the use of cash.
Source: https://economictimes.indiatimes.com/news/india/india-singapore-launch-real-time-payments-link-upi-with-paynow/articleshow/98131017.cms#:~:text=Prime%20Minister%20Narendra%20Modi%2C%20his,Interface%20(UPI)%20and%20PayNow.