It’s no exaggeration to say that India’s United Payments Interface (UPI) real-time payment formula has been a game-changer for the subcontinent. Simply put, UPI has reshaped the way Indians make payments, making them simple and instant for the first time. It’s time to move cash from one bank account to another: from a visitor to a company or between individuals.
In the roughly seven years since its launch, UPI has had 260 million users out of a population of 1. 4 billion and has been instrumental in the adoption of cashless banknotes in India thanks to its ease of use and interoperability. New Mastercard payments for 2022 The index shows that Indians are the most willing consumers in the Asia-Pacific region to use new cashless payment methods, with a maximum of 93% likely to have made such a payment in the past year.
While many fintech good luck stories come entirely from the personal sector, state-backed UPI shows that public-personal virtual monetary inclusion efforts can pay off when implemented well. After gaining a dominant position in its country, UPI is now aiming for global expansion. .
The question is: what can work for virtual invoices in India globally?
UPI’s main promotional argument around the world is that it can speed up or reduce the burden of cross-border transactions to and from India, the world’s largest remittance market. According to the World Bank, India’s remittances exceeded $100 billion in 2022. the highest figure among any country in the world and well ahead of China, number two, and Mexico, number three.
Although India has signed an agreement with the UAE’s Mashreq Bank that allows Indian travelers traveling to the country to pay for their purchases at UPI, it is only a small portion compared to the remittance market. The UAE accounts for up to 18% of remittance inflows to India, accounting for $18 billion.
Singapore is also a vital remittance market for India, much smaller than the United Arab Emirates. In late February, UPI reached another major milestone: India connected UPI to Singapore’s PayNow real-time payment system, a move that could eventually disrupt the annual exchange of remittances. border flows of more than $1 billion between the two countries.
It is conceivable that UPI’s benefactor, the National Payments Corporation of India (NPCI), aims to identify a local option for SWIFT: less expensive payment flows between India and the rest of the world through the country’s own virtual payment gateways.
Normally, it costs Indians $13 to send $200 home. However, there are no transaction fees for UPI. It’s no wonder that Ritesh Shukla, CEO of NPCI International Payments, believes that “the remittance market is about to be disrupted. “
The NPCI is also interested in building an option to SWIFT, at least partly for geopolitical reasons. It is true that the choice of cross-border payment routes is required in this regard, but it is doubtful that India can or needs to be the country that leads such an initiative.
One way to gauge the good fortune of UPI’s foreign expansion efforts will be the breadth of its network. The simplest fruit will be to get UPI to pay abroad so that Indians abroad can pay for their goods and facilities with the platform. UPI is already offered in one form or another in the United Arab Emirates, Singapore, Mauritius, Nepal, Bhutan, France, and the United Kingdom. Going forward, it will be vital for UPI to enter the United States, Thailand, Indonesia, and Malaysia. , Switzerland and Australia, all of which are favoured by Indian travellers.
Another key measure of UPI’s good fortune overseas will be the point of adoption through merchants. One way to drive merchant adoption would be to partner with local payment processors or aggregators that can help expand the Indian payments system in their respective countries.
Nepal is a vital case study for UPI’s global expansion, as it can show the feasibility of replicating the platform’s good fortune in India in a foreign market. NPCI has seen its expansion to Nepal as a vital step in UPI’s overseas expansion, given that UPI will work for Nepalese users as it does for Indians in India.
“Nepal will be the first country outside India to adopt UPI as a payment platform that promotes digitization of monetary transactions,” the NPCI said in February 2022.
If the IPU succeeds in Nepal, it could open the door to a similar expansion of the formula in neighboring countries such as Bhutan and Bangladesh, which have strong ties to India and are adopting virtual money services. While Bhutan’s population is small (777,000), Bangladesh represents a significant market opportunity with its population of 169 million.
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