India and Singapore have linked their local real-time payment systems, Unified Payments Interface (UPI) and PayNow, respectively, to facilitate instant and low-cost cross-border transactions. The launch marks the first such move for India, while Singapore has already launched a cross-border payments link with Thailand and is expected to establish another one with Malaysia.
Singapore and India Link Digital Payments Systems PayNow and UPI
India and Singapore established a real-time link to enable instant and low-cost cross-border money transfers between the two nations, Reuters reported on Tuesday. The move, which will allow users to transfer funds instantly using just their mobile phones, was made possible due to the tie-up between India and Singapore’s digital payments systems – UPI and PayNow.
“This will enable people from both the countries to immediately and at low-cost transfer funds (by) just using their mobile phones.”
– said India’s Prime Minister Narendra Modi.
The launch of the service is the first of its kind for India, the biggest recipient of remittances globally, with inflows of roughly $100 billion estimated for this year. In addition, the real-time link represents a significant step for the cross-border transactions between India and Singapore, which amount to more than $1 billion annually.
Difference Between Traditional Cross-Border Payment Links and CBDCs
India’s UPI and Singapore’s PayNow refer to real-time payment systems that enable instant fund transfers between local banks without disclosing account information. The rollout of the cross-border real-time payment link will allow such payments to be instantly made between the two countries at a much lower cost.
Services that facilitate international cross-border money transfers continue to gain popularity in Asia. Singapore, one of the world’s biggest fintech and crypto hubs, has already launched a cross-border payments link with Thailand and is currently developing one with Malaysia.
The cross-border payment links are sometimes compared to central bank digital currencies (CBDCs). However, while the two share some similarities, they also differ.
Cross-border payment systems use traditional currencies and rely on intermediaries such as banks or payment processors to facilitate transactions. On the other hand, CBDCs refer to digital versions of traditional currencies issued and backed by central banks and have additional features that fiat currencies don’t, such as programmability, traceability, and interoperability with other digital payment systems. India launched its CBDC pilot program last year, but it has attracted very little interest.
This article originally appeared on The Tokenist
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