After big success at home, how India’s UPI is going global

India is planning to expand its popular Unified Payments Interface (UPI) globally. As per a Mint report, the country is in talks to take UPI to Gulf countries, including Bahrain and Saudi Arabia. The National Payments Corporation of India (NPCI), the umbrella organisation tasked with supervising retail payment systems in the country, is leading the dialogue to set up bank-to-bank transfer systems for cross-border remittances.

“NPCI is in initial discussions with a few Gulf countries for developing cross-border remittances using UPI, which will be primarily bank account-to-bank account transfers. The discussions have been facilitated by the Reserve Bank of India (RBI) and other-country central bank collaboration, and by our Indian mission offices," NPCI managing director and chief executive Dilip Asbe told Mint.

What is UPI and how has it revolutionised the digital payments system in India? How is the country making UPI global? We explain.

What’s UPI?

UPI is an interface through which you can make payments and send or receive money using a quick response (QR) code or a four or six-digit PIN.

Allowing users to make real-time cashless payments, UPI transfers money directly between the bank accounts of the sender and receiver. Creating a Virtual Payment Address (VPA), this mobile-based quick payment system permits both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments.

Apps such as PhonePe, Google Pay, Paytm, BHIM, SBI Pay and BOB UPI allow users to make payments through UPI.

UPI in India

Launched in 2016, UPI has grown exponentially in these past years in India. Citing NPCI data, Business Standard reported that the number of UPI transactions touched 9.41 billion in May worth a whopping Rs 14.3 trillion in terms of value.

In March, RBI governor Shaktikanta Das said that daily UPI transactions crossed 36 crores in the last year, a 50 per cent rise from 24 crores in February 2022, reported PTI.

India has also taken the lead in digital payments worldwide. With 89.5 million transactions in 2022, India topped the list of five countries for digital payments, according to data from MyGovIndia.

The data also showed that India accounted for 46 per cent of the global real-time payments last year.

Brazil is second on the list with 29.2 million digital transactions, followed by China (17.6 million transactions), Thailand (16.5 million transactions) and South Korea – 8 million transactions.

Indians are also the most willing to use emerging cashless payment methods in the Asia-Pacific region, according to Mastercard’s 2022 New Payments Index.

As many as 260 million people in India reportedly use UPI to make seamless payments. “About 330 banks and 25 apps use UPI, including all the key third-party payment providers like Google Pay, PhonePe and Paytm,” according to a Forbes report.

India is also widening UPI services in the country.

In September 2022, the RBI, which governs NPCI, launched UPI Lite for small-value transactions. It allows users to make transactions even in offline mode, provided that their UPI Lite wallet has money.

For feature phone users, NPCI and RBI jointly floated UPI 123Pay last year which enables payments without an internet connection. Users have to dial the IVR number, enter the mobile number of the recipient and enter their UPI PIN to transfer the money. Payments can also be made by giving a missed call on the number displayed at the merchant outlet and using UPI PIN to allow the transfer.

At the time of the launch of UPI 123Pay, RBI governor Das had said: “This current decade will witness a transformative shift in the digital payments ecosystem in the country.”

ALSO READ: UPI fraud cases on the rise: How to protect yourself from such scams?

UPI going global

India is making efforts to make UPI international to ease cross-border real-time payments.

In July 2021, Bhutan was the first country to allow UPI transactions through BHIM App.

Nepal adopted UPI for digital transactions in March 2022.

After India assumed the G20 Presidency in December, the RBI and NPCI in February this year launched ‘UPI One World’ for foreign nationals visiting the country.

“The biggest selling point for UPI internationally is that it could both accelerate and reduce the cost of cross-border transactions to and from India, the world’s top remittances market,” Zennon Kapron, founder and director of Kapronasia, one of Asia’s leading providers of consulting services, wrote for Forbes in April this year.

Earlier this year, India’s UPI linked with Singapore’s fast payment system, PayNow, for faster remittances between the two countries. This will enable the Indian diaspora in Singapore, particularly migrant workers and students, to make quick and low-cost fund transfers.

India signed a deal with the UAE’s Mashreq Bank to help the Indian diaspora pay for transactions through UPI. After the United States, the UAE is the second-largest source of remittances to India.

“The availability of UPI to the UAE-based NRIs (Non-Resident Indians) and other Gulf countries through international mobile numbers will have a significant impact on the volume of foreign currency remittances to India,” Sauradeep Bag, Associate Fellow at Observer Research Foundation (ORF), wrote in an article.

Besides the UAE, NRIs in Canada, Hong Kong, Oman, the US, Australia, Singapore, the UK, Saudi Arabia, and Qatar who have bank accounts types such as Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts can avail UPI services using their international phone numbers.

With India’s UPI push, this cashless payment system surely has the potential to leave a mark globally.

With inputs from agencies

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