The Reserve Bank of India (RBI) and the Monetary Authority of Singapore (MAS) unveiled an initiative on Tuesday that is September 14, 2021, to link their respective fast payment systems that are Unified Payments Interface (UPI) and PayNow to enable low-cost cross-border financial transfers in real-time.
It has been stated that by July 2022, the link is expected to be operational.
Singapore uses the PayNow system, while India uses the Unified Payments Interface (UPI) as a quick payment option.
Further, the RBI stated in a press statement that the UPI-PayNow connectivity will allow users of both systems to perform reciprocal fast, low-cost fund transfers without having to sign up for the other payment system.
Now, what are the UPI and PayNow systems?
UPI is a mobile-based ‘rapid payment’ system in India that allows users to make payments at any time of day or night using a Virtual Payment Address (VPA) that they generate. This reduces the possibility of the remitter disclosing bank account information.
UPI enables a user to send and receive money and supports both P2P and P2M payments.
PayNow, like the Indian method, is an electronic fund transfer service that allows a user to send money to a payee immediately by using his or her mobile number, NRIC/FIN, or UEN number rather than his or her bank account number used majorly in Singapore.
“The UPI-PayNow linkage will enable users of each of the two fast payment systems to make instant, low-cost fund transfers on a reciprocal basis without a need to get on boarded onto the other payment system,” the RBI said in a statement.
The connectivity, according to the RBI, will represent a significant step forward in the development of cross-border payment infrastructure between India and Singapore. It will also be closely aligned with the G20’s (an intergovernmental forum made up of 19 countries and the European Union) financial inclusion aims of making cross-border payments faster, cheaper, and more transparent.
The vision Behind
According to the RBI, the linkage builds on previous efforts by NPCI International Private Limited (NIPL) and Network for Electronic Transfers (NETS) to foster cross-border interoperability of payments using cards and QR codes between India and Singapore, and will further anchor trade, travel, and remittance flows between the two countries.
This project is also in accordance with the central bank’s aim, as expressed in the Payment Systems Vision Document 2019-21, of examining routes and charges for inbound cross-border remittances.