Developments in cross-border payments across SEA

India's Unified Payments Interface (UPI) has taken the country by storm. While the government-announced demonetization movement of 2016 pushed cashless transactions by many folds in India, the COVID-19 pandemic in 2019 strengthened its roots, putting the final seal on UPI as the flag-bearer of the fintech revolution in India.

And the numbers are proof! As per the National Payments Corporation of India (NPCI), UPI’s total transaction value stood at INR 125.95 lac crores, up 1.75X year-on-year. The digital payments network enabled 2,348 transactions every second in 2022.  

Third-party providers (TPAPs) or apps used to make UPI transactions, such as PhonePay, GooglePay, Paytm, and CRED, have registered tremendous growth. For instance, CRED saw its transaction value skyrocket to 13.19 crore in Nov 2022 from just 1.07 crore in Jan 2022.  

With UPI seeing a great run on the Indian stage, enabling crores of people to make everyday payments at their fingertips, a fair question arises — can this ecosystem be enabled in a way that allows cross-border linkage?

The answer is yes! And steps have already been taken by the Indian government to enable progress on this front.

UPI is no longer just an Indian thing!

As discussed above, the Unified Payments Interface system has grown and how, showing no signs of retreating since its adoption nationwide. Beginning with a mere 21 banks in 2016, today, the UPI ecosystem has around 400 banks in its kitty.

With UPI, payments to merchants have never been more manageable, requiring four essentials: a smartphone, a mobile number, a bank account, and an internet connection.

Recently, in January 2023, the National Payments Corporation of India permitted users from ten countries to use UPI with International phone numbers and Indian bank accounts.  These countries are — Singapore, Australia, Canada, Hong Kong, Oman, Qatar, USA, Saudi Arabia, UAE, and the United Kingdom.

In continuation of this announcement, Reserve Bank of India Governor Shaktikanta Das announced, “Inbound travelers to India from G20 countries will be able to make payments via UPI (Unified Payments Interface).”

In her words, “UPI has become hugely popular for retail digital payments in India.  It is now proposed to permit all inbound travelers to India to use UPI for their merchant payments while they are in the country.”

UPI for G20 travelers

RBI’s announcement to allow international travelers from G20 countries to access UPI services has been enthusiastically welcomed as the simplest way for international travelers to pay merchants in India.

This facility is available to non-resident Indians with international numbers linked to their NRE/NRO accounts. And as a commencement, travelers from G-20 countries landing at select airports, including Mumbai, New Delhi, and Bengaluru, can leverage this facility.

Prepaid Payment Instruments (PPI) linked to UPI will be issued to eligible travelers to pay for products and services at over five crore merchant outlets that accept QR-based payments. Till now, ICICI, IDFC First, and two non-bank PPI issuers, Pine Labs Pvt Ltd. and Transcorp International Limited, will issue such wallets.  

India took over the Presidency of the G20 from Dec 1, 2022, to Nov 30, 2023. The G20 consists of 20 nations — Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, South Korea, Japan, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union.

Enabling UPI for foreign tourists has been a leapfrog advancement in making India a “destination of choice” for international tourists. The UPI framework ensures added safety in a country where ATMs are non-functioning or non-existent in remote areas, and carrying cash and haggling is a hassle.

Moreover, while card-based payments require a point-of-sale (POS) terminal, UPI payments simply require a quick-response (QR) code that can be quickly scanned to pay a service provider, individual, or business. UPI has become the norm for everyone, from a rickshaw puller to a cab driver to a local goods vendor.

Anup Nayar, CEO-domestic at In-Solutions Global, said, “The RBI’s announcement of extending the scope of UPI to international travelers shows that UPI is making inroads globally. This facility will reduce their dependence on cash and make the process of payments easier for them.”

The latest statistics speak for themselves. As of January 2023, 385 banks, with a collective transaction value of Rs. 13 lakh crores, are live on UPI.

The Merging of India’s UPI and Singapore’s PayNow

In February 2021, India launched a cross-border payment framework by joining India’s UPI and Singapore’s PayNow in the presence of the Indian Prime Minister and his Singapore counterpart.

This connectivity has been a giant leap forward in making cross-border remittances simple, quick, safe, and cost-effective. It also aligns with the Finance Minister of India’s recent announcement, “The NPCI is taking UPI international…..countries like Singapore, Bhutan, France are interested in India’s payment systems.”

Creating a favorable environment for an easy flow of digital funds between the two countries will benefit tourists, workers, and small businesses.

What implications does this have for payment companies?

In the grand scheme of things, payment companies need to stay competitive to create a secure and conducive environment for consumers, both domestic and international consumers, to adopt fintech products and solutions.

They may need to consider a few potential changes:

• Cross-border payments: With the collaboration between UPI and PayNow, companies may need to enable cross-border payments and remittances for their customers. This could involve partnering with banks or payment providers in both countries to facilitate these transactions.
• Compliance with regulations: Companies may need to ensure that their payment products comply with regulations in India and Singapore. This could involve obtaining licenses or certifications from relevant authorities and complying with data privacy and security requirements.
• Integration with UPI and PayNow: Companies may need to integrate their payment products with UPI and PayNow to enable seamless customer transactions. This could involve working with the platforms to ensure compatibility and interoperability.
• Currency conversion: Companies may need to enable currency conversion to facilitate cross-border payments. This could include partnering with foreign exchange providers or building currency conversion capabilities into their payment products.

Overall, the collaboration between UPI and PayNow could open up new opportunities for companies to expand their payment offerings and reach customers across borders. However, companies must ensure they can comply with regulations, integrate with the platforms, and provide a seamless user experience to take advantage of these opportunities.

With such developments in India’s cashless payment interface, UPI is all set to transcend boundaries and create a revolution in India and international lands.

Get in touch with our experts at Thence to know more about the future of UPI.

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