If you happen to travel to the UK , UAE or neighbouring Bhutan , your checkout experience at merchant outlets will be as seamless as 'scan and go.' You do not need a forex card or a credit card or cash because the UPI App will take you through the checkout process safely from a merchant outlet.
The UPI technology allows money transfers in seconds from person to person (P2P) or person to merchant (P2M) bank accounts. Most Western countries, which rely solely on card payments, lack real-time payments. And that's where the subsidiary of National Payments Corporation of India (NPCI) is placing large bets.
Two years ago, NIPL was set up as a wholly-owned subsidiary of NPCI to roll out India’s domestic card scheme (RuPay) and mobile payment solution (UPI) in global markets. NIPL is helping countries to build payment ecosystems, including P2P, P2M, and cross-border payments. “Why should one reinvent the wheel? We have done it successfully in India and we want to share it with the world," says Shukla of NIPL. India’s neighbour Nepal is a classic example of NIPL building a modern digital infrastructure for another country.
In July last year, NPCI’s global subsidiary signed up with Bhutan’s central bank to enable the usage of the UPI-powered BHIM App. Bhutan will be the first nation to adopt UPI standards for its QR deployment. This August, NIPL signed an MoU with the UK’s payments solutions provider PayXpert to make the UPI-based QR code solutions available in the UK on all PayXpert’s Android POS devices for in-store payments.
UPI acceptance has also gone live with the UAE’s Mashreq Bank, which deploys QR code in UAE. In the P2M space, Indian travellers and tourists in the UAE can now make payments through BHIM UPI across 10,000 shops and merchant stores via NEOPAY, the payment subsidiary of Mashreq Bank. In November, NIPL also tied up with the UAE’s largest merchant acquirer--Network International--to help Indian travellers visiting the UAE by allowing them to make payments seamlessly through UPI-based mobile applications in retail merchant partners, such as jewellers, supermarkets, and duty-free shops.
By the end of this year, five Southeast Asian goliaths--Malaysia, Singapore, Indonesia, Thailand, and the Philippines--will sign a contract to combine their respective QR code payment systems. This will pave the way for merchant payments via QR codes throughout the region. “It is really ideal for us to build a pipe with them and start routing the transactions through their infrastructure, so we add value to them,” says Shukla.
The other big piece for UPI expansion is remittances. India is one of the top recipients of cross-border remittances, receiving more than $80 billion annually and sending around $20 billion abroad. The remittance market is dominated by banks, money transfer operators (MTOs), and foreign exchange dealers. There are 32 million Indians who live outside India, according to market studies.
That number is comparable to the populations of Saudi Arabia, Malaysia and Australia combined. “Wherever we see a huge concentration of Indians, we are working with the payment players in the remittance space,” says Shukla. The current inward remittance infrastructure includes a ‘Rupee Drawing Arrangement’ where the banks in India tie up with global licensed institutions, which hold a vostro account on its behalf in the foreign currency. Similarly, there are also Money Transfer Service Schemes (MTSS) for remittances for foreign tourists travelling or residing in India. The main payment rails or pipes are something called SWIFT, whose network is used to transfer money.
“NPCI is trying to make UPI the rails for transferring money. But that adoption has been slow, mainly because of the local regulations and the processes and policies around moving global money," says Raj K., Founder and CEO of FairexPay, a Cross-Border Fintech. But at some point, cost-effective real-time settlement globally will be the order of the day. That’s where UPI would be the framework for adoption. “We have identified payment players. We are working in different markets where the progress is in different stages. There are markets where we are discussing commercial and technical issues,” says Shukla.
For example, NIPL has made a deal with Western Union, a world leader in cross-border payments, so that money can be transferred into bank accounts in real time. NIPL has also done something strategic by connecting with Singapore’s PayNow, which is a popular payments ecosystem. As a result, the two fast payments ecosystems will enable real-time money transfers between the two countries. “Once you’ve done it, then you can just create a template and go to other markets and start deploying it," says Shukla. NIPL’s cross-border payments initiative is a work in progress, which has huge potential to not only make payment transfers easier and faster, but also reduce the high cost of remittances.
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