The Reserve Bank of India (RBI) and Monetary Authority of Singapore (MAS) are set to link their Unified Payment Interface (UPI) and PayNow fast payment systems by July 2022, allowing users to transfer money across borders using mobile numbers and virtual payment addresses.
The central banks hope this will help users of each payment system make instant, low-cost fund transfers directly from one bank account to another between the two countries. Fund transfers will be able to be made between India and Singapore using mobile phone numbers while funds from Singapore can be sent to India using virtual payment addresses.
The banks said that the connectivity between Pay Now and UPI is a major milestone in the development of next-generation infrastructure for payments between Singapore and India and is closely aligned with the G20’s financial inclusion priorities of driving faster, cheaper, and more transparent cross-border payments.
“By reducing the cost and inefficiencies of remittances between Singapore and India, the PayNow-UPI linkage will directly benefit individuals and businesses in Singapore and India that greatly rely on this mode of payment,” said Sopnendu Mohanty, chief finTech officer of MAS. “Given that PayNow and UPI are integral components of their respective national digital infrastructures, the link between the two systems also paves the way for establishing more comprehensive digital connectivity and interoperability between the two countries.”
MAS added that the new initiative builds on earlier efforts to foster cross-border interoperability of card and QR payments and “will further anchor the substantial trade, travel and remittance flows between the two countries.”
UPI is India’s mobile-based fast payment system that allows customers to make round the clock payments instantly using a virtual payment address created by the customer, which RBI says eliminates the risk of sharing bank account details by the remitter. PayNow is Singapore’s fast payment system which allows users to send and receive instant funds from one bank or e-wallet account to another in Singapore via their mobile number.
At the start of September, the reserve banks of Australia, Singapore, Malaysia, and South Africa were set to test the use of central bank digital currencies (CBDCs) for international settlements in the hopes that it would reduce the time and costs for these types of transactions. The project, named “Dunbar”, aims to develop prototype shared platforms for cross-border transactions using various CBDCs.
