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India and Singapore have announced that the bilateral linkage of their instant payment systems, UPI and PayNow, is now live, marking the first linkage of its kind for India.
The linkage of India’s Unified Payments Interface (UPI) and Singapore’s PayNow will allow users of both systems to make safe, instant and virtually cost-free cross-border payments using their respective mobile apps.
An India UPI user sending money to Singapore will need to key in the recipient’s registered PayNow mobile number or Virtual Payment Address (VPA), while a Singapore PayNow user sending money to India will need to key in the recipient’s registered UPI identity.
UPI identity and VPA are identifiers that are uniquely linked to an individual user’s bank account.
Initially, both countries will have a limited number of banking partners facilitating transactions for customers, but this will be expanded over time.
On the Indian side, State Bank of India, Indian Overseas Bank, Indian Bank and ICICI Bank will facilitate both inward and outward remittances for Indian users, while Axis Bank and DBS India will facilitate inward remittances.
To begin with, Indian users can remit up to ₹60,000 in a day ($750, $S1,000) using the instant payments linkage.
This is the same daily limit as applied to the Singapore-Thailand instant payments linkage, the world’s first of its kind, which was launched in 2021.
On the Singapore side, DBS Bank and Liquid Group, a non-bank financial institution (NBFI), will facilitate inward and outward remittances for Singapore users.
The service will only be available to specific customers to start with, although DBS Bank and Liquid Group have said they intend to gradually expand eligibility to cover all customers by the end of next month.
At launch, selected DBS customers will be able to transfer funds of up to S$200 ($150) per transaction, capped at S$500 ($373) per day, but by the end of next month the daily limit will be increased to S$1,000 ($750).
The linkage is targeted mainly at foreign workers and overseas students in each country, enabling them to make and receive seamless remittances, although it can also be used by international businesses.
The linkage also provides for automatic incorporation of capital control rules for enhanced efficiency.
In a statement, the Monetary Authority of Singapore (MAS) said the linkage is the first of its kind to use scalable cloud-based infrastructure that can accommodate future volume increases. It is also the first of its kind to be built with participation from NBFIs.
“As we progressively add more users and use cases, the PayNow-UPI linkage will grow in utility, and contribute more to facilitating our trade and our people-to-people links,” said Singapore Prime Minister Lee Hsien Loong.
According to Loong, the idea of linking PayNow and UPI was first conceived in 2018, when Indian Prime Minister Narendra Modi visited Singapore.
Since then, the two countries’ central banks have been working with banks, payment system operators, such as Banking Computer Services and the international arm of the National Payments Corporation of India (NPCI), to establish the linkage.
Plans to enable the linkage were announced publicly in September 2021, with a target launch date of July 2022.
A major remittance corridor
At present, cross-border retail payments and remittances between Singapore and India are worth more than $1bn annually, and this is set to increase with the ease of use that comes with instant payments.
Loong added that the UPI-PayNow linkage is not the first collaboration between the two countries on cross-border payments.
In 2018, Singapore’s NETS worked with the NPCI International Payments to allow card and QR code payments between the two countries.
Both central banks have also stated that the launch of the UPI-PayNow linkage is a “major milestone” in their journey towards meeting the G20 goals of improving the cost, speed, access and transparency of cross-border payments.
