India and Singapore on Tuesday launched a real-time digital payment method to enable faster remittances between the two countries.
From now on, India's real-time customer, or retail payment system, Unified Payments Interface (UPI), will allow digital payment through its equivalent network in Singapore, PayNow, in real time to facilitate easier cross-border money transfers at a competitive rate.
"This will enable people from both the countries to immediately and at low-cost transfer funds (by) just using their mobile phones," Indian Prime Minister Narendra Modi said at a virtual event also attended by Singapore's Prime Minister Lee Hsien Loong.
Indian Central Bank Governor Shaktikanta Das initiated the first transaction with his counterpart Managing Director Ravi Menon, according to a statement issued by the Monetary Authority of Singapore on Tuesday.
Per 2021 data, almost 700,000 Indians live or work in Singapore, which includes students and migrant workers too.
All You Need to Know About Linkage Between UPI and PayNow
According to a statement released by MAS, DBS Holding Group and a non-bank financial institution, Liquid Group, are participating from Singapore in the tie-up.
The Indian banks participating in the linkage are Axis Bank Ltd., DBS India, ICICI Bank Ltd., Indian Bank, Indian Overseas Bank, and State Bank of India.
As a start, selective customers of Singapore's largest bank can use the so-called PayNow-UPI linkage to transfer funds of as much as S$200 (US $150) per transaction, capped at S$500 a day.
The service will be extended to all customers by March 31, and they can transfer funds of as much as S$1,000 a day.
The new system is expected to bring down the cost of sending remittances by as much as 10 percent.
India Boosting Digital Payments
Today, India's announcement is seen as a continuation of New Delhi's ongoing effort to expand its tech infrastructure in digital payments with other nations.
As India is also hosting the G20 this year, it is continuously speaking with other nations on digital payment involving the respective country's central bank.
Although Singapore is not a G20 member, it has been invited to participate at the G20 Summit this year.