India and Singapore Link Payment Systems for Faster Transfers

India and Singapore Forge Digital Payment Link

A collaborative effort is underway between India and Singapore to connect their digital payment networks. This initiative aims to facilitate “instant, low-cost fund transfers,” representing a substantial move to modernize cross-border transactions. Currently, these transactions exceed $1 billion annually between the two nations.

UPI and PayNow Integration

The integration of India’s Unified Payments Interface (UPI) and Singapore’s PayNow is projected to be fully operational by July 2022, as announced by the central banks of both countries. This connection will allow users of either system to transact with each other seamlessly, without requiring registration on the other platform.

According to a statement released by the Monetary Authority of Singapore, transfers from India to Singapore will be achievable using mobile phone numbers. Conversely, payments from Singapore to India will utilize UPI virtual payment addresses (VPA). The user experience will closely mirror a domestic transfer within each respective system.

The Rise of Digital Payments

UPI, a five-year-old payment infrastructure created by a consortium of retail banks, has rapidly become the preferred method for money transfers among individuals and businesses in India.

Adopted by numerous companies, including Google and Facebook, the system now processes over 3 billion transactions monthly. Similarly, Singapore’s PayNow promotes interoperability between banks and payment applications, enabling transactions between users on different platforms.

Addressing Remittance Costs

A recent Citi report indicates that approximately 250 million individuals globally send over $500 billion in cross-border remittances each year. However, this sector is poised for significant change.

Citi analysts highlighted the excessively high fees associated with these transfers, stating, “The fees are extremely high. It is embarrassing that we have not solved this issue so far.” The global average cost for sending money currently stands around 6.5%. The Reserve Bank of India (RBI) and the Monetary Authority of Singapore (MAS) have not yet disclosed the cross-border fees that will be applied to their users.

Strategic Alignment and Future Implications

The RBI characterized this project as a “significant milestone” in the development of cross-border payment infrastructure between India and Singapore. It also noted the linkage’s alignment with the G20’s financial inclusion goals, specifically focusing on faster, cheaper, and more transparent international payments.

This initiative builds upon previous collaborations between NPCI International Private Limited (NIPL) and Network for Electronic Transfers (NETS) to enhance cross-border payment interoperability using cards and QR codes. It is expected to further strengthen trade, travel, and remittance flows between India and Singapore.