From Tuesday, residents of Singapore and India can instantly transfer money to each other via Unified Payments Interface (UPI) and PayNow.
The cross-border real-time payment systems linkage was launched at 11am on Monday led by Reserve Bank of India (RBI) governor Shaktikanta Das, and Ravi Menon, managing director of the Monetary Authority of Singapore. Prime Minister Narendra Modi and Singapore Prime Minister Lee Hsien Loong virtually attended the launch event.
The low-cost, faster and 24×7 cross-border connectivity project can be utilised by Indians using Google Pay, Paytm and other similar digital payment systems to transfer money to people in Singapore.
What is UPI?
UPI or Unified Payments Interface, developed by National Payments Corporation of India (NPCI), is a quick payment method that enables the instantaneous transfer of funds through a mobile phone. Through the creation of a Virtual Payment Address (VPA), the risk of sharing bank account details is eliminated. The real-time system supports both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments.
What is PayNow?
Similar to India’s fast payment system – UPI – PayNow is Singapore’s counterpart. With just a mobile number, users can send and receive funds from one bank or e-wallet account to another in Singapore. This peer-to-peer payments linkage is enabled through participating banks and Non-Bank Financial Institutions (NFIs) in the country.
How does it work, what does the move mean
Once implemented, fund transfers can be made from India to Singapore using mobile phone numbers, and vice versa using UPI virtual payment addresses.
The project is expected to greatly benefit the Indian diaspora, especially migrant workers and students, in Singapore as it allows faster and cost-efficient funds transfer across both countries without the mandate of getting onboard the other payment system. According to the RBI Remittance Survey, 2021, Singapore figures in the top four inward remittances market for India
As per the ministry of external affairs (MEA) document Population of Overseas Indians (2022), there are approximately 6.5 lakh Indians, including non-resident Indians and persons of Indian origin, currently residing in Singapore.
Monetary Authority of Singapore (MAS) chief fintech officer Sopnendu Mohanty, on the sidelines of the G20 First Working Group’s meeting on financial inclusion in Kolkata, had said that the integration of the system will bring down the cost of sending remittances by as much as 10 per cent.
“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. Given that PayNow and UPI are integral components of their 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,” Mohanty added.
The RBI said that the linkage will be a significant milestone in the development of next-generation infrastructure for cross-border payments between India and Singapore. It will also closely align with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments.