India, Singapore harmonise their rapid payment schemes

Smartphone-driven instant money transfer across borders to come online in 2022


Singapore and India have struck an agreement to harmonise their peer-to-peer payments systems, allowing low-cost real-time cross-border payments

India currently operates a system called the Unified Payments Interface (UPI) that offers the chance to make real-time money transfers using an identifier tied to the scheme which does not divulge account details to remitters. Singapore's PayNow operates along similar lines, using mobile phone numbers as an identifier.

Come the year 2022, the two schemes will become interoperable. As India's Reserve Bank puts it "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 onboarded onto the other payment system."

UPO and PayNow can also handle payments between businesses, or from consumers to businesses.

Singapore's Monetary Authority (MAS) hinted at more to come.

"The linkage will provision for increased volumes of remittance traffic, multi-entity participation, automation of capital control rules, and enriched message formats to accommodate future innovation by linkage participants," the Authority's announcement reads. "These enhancements constitute a significant upgrade to the design of cross-border payment systems today."

Both the UPI and PayNow are provided by central banks, were designed to be fast and cheap to use, and rely on the participation of regulated retail banks. All transactions conducted on, or between, the platforms are therefore recorded and scrutinised.

Those features make harmonising the two platforms a low-risk prospect, as it reduces the likelihood that money laundering and other naughtiness can occur. Newer and less-regulated payment options such as cryptocurrency exchanges, apps, or Alipay are not well-loved by central banks or regulators because they have a certain appeal to those who like to move money without being observed doing so. Or move it through nations that may not be as interested in observing money flow as they are in frictionless commerce.

Singapore and India are both hopeful harmonising their schemes lubricates trade, benefits citizens, and leads to further collaboration.

"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," said Sopnendu Mohanty, Chief FinTech Officer at MAS. ®

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