ePaisa Payment Gateway: India and Singapore to link their payment systems for "instant and low-cost" cross-border transactions

The central banks of India and Singapore announced on Tuesday that they are working to interconnect digital payment systems to enable "instant, low-cost fund transfers," which would significantly boost cross-border transactions between the two countries, TechCrunch reports.

The project aims to connect India's Unified Payments Interface (UPI) with Singapore's PayNow by July 2022, the Reserve Bank of India said. Users in both systems will be able to transact with each other without having to register on a second platform, both banks mentioned.

The Monetary Authority of Singapore (MAS) said in a press release, "Post implementation, it will be possible to transfer money from India to Singapore via mobile phone numbers and vice versa, from Singapore to India via UPI Virtual Payment Addresses (VPAs). The experience of transferring money to the UPI VPA via PayNow will be similar to transferring money to the PayNow VPA in the country."

Developed by a consortium of several retail banks, UPI has become the most popular digital payment method in India. Dozens of local and global companies, including Google and Facebook, have adopted UPI, which currently processes more than 3 billion transactions per month. Similarly, Singapore's PayNow has enabled interoperability between banks and payment apps, allowing users to make transactions between different apps.

Earlier this year, a Citibank report noted that nearly 250 million people worldwide send more than $500 billion a year in cross-border remittances. However, this area is ripe for change. Analysts at Citi wrote: "The costs are staggeringly high, and it's embarrassing that we haven't solved the problem yet. The average cost of a global remittance is about 6.51 TP3T. the Reserve Bank of India and the Monetary Authority of Singapore have yet to reveal the cross-border fees that will be charged to users."

In a statement, the Reserve Bank of India said, "The UPI-PayNow connection is an important milestone in the development of cross-border payments infrastructure in India and Singapore, and is closely aligned with the G20's financial inclusion priorities, which are aimed at facilitating faster, cheaper and more transparent cross-border payments."

This connectivity builds on previous efforts by National Payments Corporation International Private Limited (NIPL) and Network for Electronic Transfers (NETS) to achieve interoperability for cross-border payments between India and Singapore using cards and QR codes and will further enhance trade, travel and remittance flows between the two countries. This initiative is also in line with the vision set out by the Reserve Bank of India (RBI) in its Payment System Vision 2019-21 document, which includes a review of cross-border remittance channels and fees.