22nd February, 2023 Economy
Disclaimer: Copyright infringement not intended.
- India’s Unified Payments Interface — better known as UPI — and Singapore’s PayNow have been officially integrated.
Background and Details
- The project to link both the fast payment systems was initiated in September 2021 to facilitate faster, more efficient and transparent cross-border transactions relating to trade, travel and remittances between the two countries.
- They allow for a “real-time payment linkage”.
- This will enable faster remittances between the two countries at a competitive rate.
What are UPI and PayNow?
- Unified Payments Interface (UPI) is India’s mobile-based fast payment system, which facilitates customers to make round-the-clock payments instantly, using a Virtual Payment Address (VPA) created by the customer.
- It eliminates the risk of sharing bank account details by the remitter.
- UPI supports both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments and it also enables a user to send or receive money.
Read all about UPI in detail: https://iasgyan.in/daily-current-affairs/upi-4
- PayNow is a fast payment system in Singapore.
- It enables peer-to-peer funds transfer service, available to retail customers through participating banks and Non-Bank Financial Institutions (NFIs) in Singapore.
- It allows users to send and receive instant funds from one bank or e-wallet account to another in Singapore by using just their mobile number, Singapore National Registration Identity Card (NRIC)/Foreign Identification Number (FIN), or VPA.
Significance of the UPI-PayNow linkage
- Cross-border retail payments are generally less transparent and more expensive than domestic transactions.
- The UPI-PayNow linkage is a significant milestone in the development of infrastructure for cross-border payments between India and Singapore and closely aligns with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments.
How will it benefit the citizens of both countries?
- 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 board the other payment system.
- It will also help the Indian diaspora in Singapore, especially migrant workers and students, through the instantaneous and low-cost transfer of money from Singapore to India and vice-versa.
- Of the total inward remittances to India in 2020-21, the share of Singapore stood at 5.7 per cent, according to the RBI Remittance Survey, 2021.