The linkage of digital payment systems of India and Singapore will lay a foundation for a global digital payment network and lead to more innovations in the e-payment ecosystem in India, experts told Business Standard.
On Tuesday, the two countries linked their digital payment systems, United Payments Interface (UPI) and PayNow, to enable real-time money transfers. The users of these platforms in India and Singapore can now send money across the border using just a mobile number, much like UPI in India.
"Considering the Indian diaspora across the globe, the National Payments Corporation of India (NPCI) has recently been planning to allow NRIs from 10 countries, namely Singapore, Hong Kong, Oman, Qatar, Saudi Arabia, United Arab Emirates, USA, Australia, Canada, and the United Kingdom to digitally transfer funds using the UPI platform from their NRE/NRO accounts. Singapore is the first from this set of 10 countries," Supratik Nag, vice president of product management at Maveric Systems, said.
"The real-time payment networking with Singapore is just the beginning of a greater disruption of the digital payment ecosystem by India," he added.
Singapore is among the top countries sending remittances to India, after the US, United Arab Emirates and the UK. According to data from the Reserve Bank of India (RBI), it accounted for almost 6 per cent of India's total inward flows of $89 billion from individuals in 2021-22.
According to Vishal Mehta, managing director (MD) at Infibeam Avenues Ltd, this "will boost a secured global digital payment by laying the foundation of a global digital payment network".
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DBS Group Holdings is the first participating bank from Singapore. Apart from DBS, a non-bank financial institution, Liquid Group, will offer cross-border fund transfers.
The banks in India participating in this exercise are Axis Bank, DBS India, ICICI Bank, Indian Bank, Indian Overseas Bank and State Bank of India.
Initially, selected customers of DBS will be able to use the linkage to transfer funds of as much as Singapore $200 per transaction, with a limit of Singapore $500 a day. By March 31, all the customers will be able to make these payments and transfer funds of as much as Singapore $1,000 a day.
"In India, while only 5 – 6 banks are a part of this current India-Singapore cross-border payment network, we can expect more banks to join in," Nag said.
He added that this linkage is expected to reduce the dependency on the SWIFT network for cross-border payments in these two countries.