In a major step towards internationalisation of the unified payments interface (UPI), the Reserve Bank of India (RBI) has said countries like Japan and those from the West are working with India towards adopting the widely popular payments system.
If implemented, Japan will be the second country after Singapore to link UPI for cross-border transactions. Additionally, India has also signed an agreement with UAE to link the UPI platform with the Gulf country's Integrated Payment Platform (IPP).
"It is work in progress and will happen in the coming months. Discussions are underway with a few other countries also for linking their payment systems with ours, including some advanced economies which have evinced interest in linking to UPI," RBI deputy governor T Rabi Shankar told media after the MPC announcement on Thursday.
India and Singapore had virtually launched a real-time payments link between the India's UPI and PayNow of Singapore in February this year, making it the first country with which India launched a cross-border person-to-person (P2P) payment facility.
The UPI-PayNow linkage enables all users of the two payment systems in either country to make convenient, safe, instant, and cost-effective cross-border money transfers using their mobile apps.
Announcing the MPC policy measures, RBI Governor Shaktikanta Das says the central bank has also proposed to enable “Conversational Payments” on UPI, which will enable users to engage in conversation with AI-powered systems to make payments; introduce offline payments on UPI using Near Field Communication (NFC) technology through ‘UPI-Lite’ on-device wallet; and enhance the transaction limit for small value digital payments in off-line mode from ₹200 to ₹500 within the overall limit of ₹2000 per payment instrument.
"These initiatives will further deepen the reach and use of digital payments in the country," he adds.
Japanese digital minister Kono Taro in May 2023 had said Japan and India were trying to promote digital cooperation. "We are now seriously thinking about joining Indian UPI, the payments system.”
Masahiko Metoki, director general of Universal Postal Union (DG UPU), a UN agency that coordinates postal policies among member nations, had also met Union minister Ashwini Vaishnaw on July 18, 2023, and agreed to evaluate the UPI platform for integrating it with cross-border money remittance through postal channels.
Besides, the Union finance ministry has said the National Payments Corporation of India (NPCI), the umbrella body for operating retail payments and settlement systems in India, is working towards increasing the market share of the BHIM App in UPI transactions.
UPI has seen immense popularity in the recent past, with the total value of UPI transactions touching ₹14,75,464.27 crore in June 2023, way up from ₹10,14,384 crore in June 2022. In volume terms, the UPI transactions surged to 9,335.06 million in June 2023 as compared to 5,862.75 million in June 2022. In the UPI space, three major players PhonePe, Google Pay, and Paytm command around 96% of the entire UPI transactions value.
