Singapore, India to link real-time payment systems PayNow and UPI by 2022

Sep 14, 2021

THE Monetary Authority of Singapore (MAS) and the Reserve Bank of India are planning to link their respective countries' national real-time payment systems, PayNow and Unified Payments Interface (UPI), by July 2022.

According to a press release by MAS, the linkage will enable users to make instant, low-cost fund transfers directly from one bank account to another between Singapore and India.

This is expected to provide 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, said the central bank of Singapore on Tuesday.

It added that such enhancements constitute a "significant upgrade to the design of cross-border payment systems today".

While fund transfers from India to Singapore will be able to take place with the new linked service using mobile phone numbers, sending money vice versa will use UPI's virtual payment address (VPA).

MAS likened the experience of making a PayNow transfer to a UPI VPA to that of a domestic transfer to a PayNow VPA. Non-bank financial institutions in Singapore that are directly connected to PayNow and FAST currently rely on VPAs to send and receive real-time payments from other e-wallet or mobile banking app users.

Calling it a "major milestone in the development of next-generation infrastructure for cross-border payments between Singapore and India", MAS said the PayNow-UPI linkage is also closely aligned with G-20's financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments.

Singapore's Nets (Network for Electronic Transfers) and India's NPCI (National Payments Corporation of India) International Private Limited have been collaborating since 2018 to enable cross-border interoperability of card and QR payments.

Linking PayNow with UPI builds upon these efforts, said MAS, and is expected to further anchor the substantial trade, travel and remittance flows between the countries.

Sopnendu Mohanty, chief fintech officer of MAS, believes the newly linked PayNow-UPI service will directly benefit individuals and businesses in Singapore and India that greatly rely on remittances, by reducing their cost and inefficiencies.

"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," he said.

Earlier this year in April, MAS and the Bank of Thailand announced they were linking PayNow with Thailand's PromptPay in a move that marked the first instant cross-border payments infrastructure to be established globally. Participating banks comprised Singapore's trio of banks as well as four banks in Thailand: Bangkok Bank, Kasikorn Bank, Krung Thai Bank and Siam Commercial.

The linkage aimed to halve remittance costs and enable transfers between the two countries to be completed under five minutes, as opposed to the previous average of one to two working days required by most cross-border remittance solutions.