Note4Students

From UPSC perspective, the following things are important :

Prelims level: Unified Payment Interface (UPI)

Mains level: UPI integration with global payment systems

upi

India’s Unified Payments Interface (UPI) and Singapore’s PayNow were officially connected to allow a “real-time payment linkage”.

What are UPI and PayNow?

UPI is India’s mobile-based fast payment system, which facilitates customers to make round-the-clock payments instantly, using a Virtual Payment Address (VPA) created by the customer.
It eliminates the risk of sharing bank account details by the remitter.
UPI supports both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments and it also enables a user to send or receive money.

It is a fast payment system in Singapore.
It enables peer-to-peer funds transfer service, available to retail customers through participating banks and Non-Bank Financial Institutions (NFIs) in Singapore.
It allows users to send and receive instant funds from one bank or e-wallet account to another in Singapore by using just their mobile number, Singapore National Registration Identity Card (NRIC)/Foreign Identification Number (FIN), or VPA.

What is the UPI-PayNow linkage?

Cross-border retail payments are generally less transparent and more expensive than domestic transactions.
The project to link both the fast payment systems was initiated in September 2021 to facilitate faster, more efficient and transparent cross-border transactions relating to trade, travel and remittances between the two countries.

Enhanced cross-border transactions: The integration will enable easier cross-border transactions between India and Singapore, reducing the need for intermediaries and associated costs.
Easier remittances: The integration will make it easier for Indian workers in Singapore to send money back home to their families.
Boost to trade and investment: The integration will facilitate smoother transactions between businesses in the two countries, potentially increasing trade and investment.
Strengthening of diplomatic ties: The integration is expected to improve diplomatic ties between India and Singapore.

The integration is made possible through the use of standardized QR codes.
The QR codes will allow users to transfer funds between the two systems in real-time, without the need for intermediaries.

More integrations: The success of the UPI-PayNow integration could pave the way for similar integrations between other countries.
Increased use of digital payments: The integration is expected to encourage the adoption of digital payments in both India and Singapore, potentially reducing the use of cash.