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India, Singapore to start inter-country money transfer system

This would greatly benefit thousands of migrant workers who typically sacrifice about 10% of their salaries as fees charged by banks for money transfers

India and Singapore have completed technical preparations to link their fast payment systems UPI and PayNow to enable fund transfers between the two countries instantaneously and at low cost — a move which is aimed at benefiting migrant workers.

The central banks of the two countries — the Reserve Bank of India (RBI) and the Monetary Authority of Singapore (MAS) — have been working on linking the United Payments Interface (UPI) with PayNow, a project that is expected to roll out very soon.

"Singapore wants to connect its PayNow with UPI and that project will finish sometime in the next few months. When that happens anybody sitting in Singapore will be able to send money to their family members in India," India's High Commissioner in Singapore, P Kumaran said.

Prime Minister Narendra Modi is likely to announce the project once it is formalized, the envoy told ANI.

The remarks of India's ambassador to the city-state came ahead of the Asean and related summits, which kicked off in the Cambodian capital of Phnom Penh, and is witnessing the participation of leaders of the 10-member regional bloc.

"For us, the practical implications sitting here is that any worker who wants to send small amounts can do so at a fraction of the money they are being charged by the standard money transfer companies. So it is going to be a big benefit to those who instead of sending money in one go can do so in small pieces and it will still cost less," the Indian envoy to Singapore said.

PayNow is similar to India's home-grown card payment network RuPay. Apart from this, it has links with other countries of the Asean, which makes it easier for people to buy and sell within the region.

"PayNow also has similar initiatives with other countries in Asean, so when PayNow connects this side with India and that side with Asean countries they can go from India to any Asean country through Singapore. They currently have a project with the Philippines, the Indian ambassador said.

Similarly, Malaysia and Thailand have made a connection with their fast payment systems.

"Eventually we will also have added connectivity and it will reduce the transaction costs of remittances," the Indian envoy said.

Under the proposed linkage, money can be transferred from India to Singapore using mobile phone numbers, and from Singapore to India using UPI virtual payment address (VPA).

There are an estimated 200,000 workers who come to Singapore to work for brief periods, during which time they often send money back home. UPI-PayNow would greatly benefit migrant workers who typically sacrifice about 10 per cent as fees charged by banks for money transfers.

Asean comprises 10 member countries — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

The Asean has become the fifth-largest economic community in the world. A linkage such as the UPI-PayNow could become a model for setting up an infrastructure for cross-border payments between India and the Asean countries.

It is estimated that once the PayNow-UPI link gets accepted, it will become much more widespread. A system of linking payment systems would make it easier for people to buy and sell within the region by scanning UPI-based QR (Quick Response) codes.

"Most Indian tourists who come here do not have a RuPay card and even if they have it they might have the domestic RuPay card so it is a bit complicated. So in the future, we see a lot of people leaning to digitalisation not carrying a lot of cash not dependant on international credit cards which have very high fees," the Indian High Commissioner in Singapore said.

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Earlier in 2021, the Reserve Bank of India (RBI) and the Monetary Authority of Singapore (MAS) announced the project to link their fast payment systems targeting a fully operational status by July 2022.

The new methods of cross-border payments can make money transactions between countries in the region fast, convenient, and much cheaper.

Such payment connectivity collaboration in the Asean would benefit migrant workers, tourists, small businesses, and enterprises.