In the realm of modern financial innovation, a remarkable tale is unfolding—the global UPI story. With its origins in India’s pioneering digital payment system, UPI has swiftly transcended national boundaries. The Unified Payments Interface (UPI) has captivated the attention of nations worldwide. The news is flooded with headlines mentioning that Indians can use UPI for cashless transactions in over 10 foreign countries.
Such a proud moment for Indians!
The global UPI story is poised to reshape the very landscape of international financial interactions. This narrative resonates with the fusion of convenience and security. UPI’s seamless interbank transactions redefine how individuals and businesses exchange value. As we embark on this narrative journey, we delve into the burgeoning global UPI phenomenon. Also, we will look at the countries that are adopting it.
Revolutionizing Transactions: The Unstoppable Triumph of UPI in India
Have you ever noticed how people frequently use UPI for buying groceries, vegetables, daily essential products, and auto-fares? Not just buyers but sellers, vendors, and auto-rickshaw drivers prefer UPI over cash. No worries about the change! This fact represents the massive success of UPI.
Irrespective of the economic status, UPI has become the dominant player in the cashless transaction system of India.
Do you remember the demonetization event of 2016? That was the moment when the objective of “Cashless Transaction” was laid in India.
Unified Payments Interface (UPI), India’s revolutionary digital payment system, transformed the nation’s financial landscape. How? You may ask. Go through the following points to get the answer-
1. Pioneering the Digital Payment Landscape
The Unified Payments Interface (UPI) emerged on the Indian financial stage in 2016, introducing a groundbreaking concept of seamless, real-time money transfers. Backed by the National Payments Corporation of India (NPCI), UPI aimed to simplify digital transactions for a diverse population.
2. User-Centric Approach
Unlike traditional methods, UPI allowed users to link multiple bank accounts to a single mobile app. It eliminated the need for cumbersome bank details during transactions. This user-centric approach swiftly garnered attention, making digital payments more accessible to even those with limited technological literacy.
3. Interoperability and Ease of Use
One of UPI’s standout features was its interoperability—users could transact across various banks through a single platform. This interoperability, coupled with a user-friendly interface, drove adoption among businesses, individuals, and even small vendors.
4. Secure and Immediate Transactions
UPI’s two-factor authentication and unique Virtual Payment Address (VPA) ensured robust security. Additionally, the instant nature of transactions, available 24/7, minimized delays, enhancing the overall user experience.
5. Government Support and Cashless Initiatives
The Indian government’s “Digital India” campaign and demonetization drive in 2016 further accelerated UPI adoption. UPI became a cornerstone of the nation’s journey towards a less-cash economy, promoting financial inclusion and reducing the dependency on physical currency.
6. Skyrocketing Transaction Volumes
Well, this section is evidence of UPI’s success in India. Let’s look at the UPI figures and related stats in India-
As per RBI-
|FY22||Contribution of UPI in total cashless transactions in India||73%|
|FY23||Worth of UPI transactions||Rs.139.2 trillion|
As per PwC (PricewaterhouseCoopers LLP) –
|Expected value of UPI transactions in the year 2026-27||1 billion|
|Contribution of UPI in total cashless transactions in upcoming years||90%|
The exponential growth of UPI transactions illustrated its remarkable success. From a modest start, UPI transaction volumes skyrocketed to billions per month, revolutionizing the payment landscape in a remarkably short span.
Global UPI Demand: The International Craze for UPI Payments
UPI’s triumph didn’t go unnoticed internationally. Other countries started studying its success to implement similar systems tailored to their economies. And this factor signaled the potential for UPI to go beyond Indian borders.
Don’t you wonder what could be the key reasons for Global UPI demand? If yes, then look at the reasons described below-
1. Inspiration from UPI’s success in India
The success of UPI in India has served as an inspiration for foreign countries seeking to modernize their payment systems. Observing India’s transformation from cash-dominated to digital-centric, other nations are keen to replicate UPI’s achievements. Thus, it tailored the concept to suit their own economic and technological landscapes.
2. Seamless Cross-Border Transactions
The appeal of UPI’s demand in foreign countries lies in its ability to facilitate effortless cross-border transactions. As businesses and individuals engage in international trade and finance, they need a streamlined alternative to traditional cross-border payment methods. And UPI’s interoperability and real-time transaction capabilities are the perfect fit for it!
3. User-Friendly Interface and Accessibility
Foreign countries are drawn to UPI’s user-friendly interface and accessibility. The straightforward nature of UPI transactions appeals to individuals who may not be well-versed in complex financial systems. Thus, it encourages broader adoption across various demographic segments.
4. Faster Settlements and Real-time Processing
In an era where speed is paramount, UPI’s real-time transaction processing is highly appealing. Foreign businesses and individuals benefit from the rapid settlement of payments. This eliminates the delays associated with traditional banking processes and contributes to improved cash flow management.
5. Diverse Range of Services
The increasing demand for UPI in foreign countries is also attributed to the diverse range of financial services it supports. Beyond basic money transfers, UPI enables users to engage in bill payments, online shopping, utility payments, and more, providing an all-encompassing digital financial ecosystem.
6. Government & Regulatory Support
In some cases, UPI’s demand abroad is boosted by governmental support and regulatory initiatives aimed at promoting digital payments and reducing cash dependency. Governments recognize the potential economic benefits of embracing UPI-like systems to enhance financial inclusion and transparency.
UPI Global Initiative
The UPI (Unified Payments Interface) global initiative refers to the expansion of the UPI system to allow users to make digital transactions outside of India. As you know, UPI is an instant payment system developed in India by the National Payments Corporation of India (NPCI). It enables users to instantly send and receive money and make various types of transactions using their smartphones.
Initially designed for domestic use, UPI has now expanded its reach to select overseas markets, facilitating overseas digital transactions. This global initiative aims to provide users with the convenience and efficiency of UPI for international transactions as well.
Countries Adopting UPI Payment System
Here, comes the most important part of the write-up. Folks are highly curious to know- “Which countries are adopting UPI?”
Let’s delve into the countries that are adopting UPI-
|Countries Adopting UPI||Year|
|United Kingdom||August 2022|
Apart from those on the list, the Government of India is in talks with many other countries. Such as Saudi Arabia, Thailand, South Korea, the Philippines, Vietnam, Cambodia, Taiwan, the United Kingdom, etc.
Look at the detailed info given below-
This is the first country that allowed UPI transactions through BHIM App. The BHIM (Bharat Interface for Money) is India’s digital payment application that works through UPI. In the year 2021, NPIL (NPCI International Payments Ltd) partnered with RMS (Royal Monetary Authority) of Bhutan. Together, they enabled and implemented BHIM UPI QR-based payments in Bhutan.
It is the second country to adopt UPI. In July 2022, the RBI signed an agreement with the Monetary Authority of Singapore (PayNow). That agreement was related to the implementation of interoperability between UPI and PayNow.
The latter is a similar platform to UPI which is based in Singapore. With PayNow, you can send and receive instant funds from banks or e-wallet accounts to another person in Singapore. All you need in PayNow is the mobile numbers, and Singapore NRIC/FIN, or VPA.
Thus, the UPI-PayNow linkage enables users to make instant and low-cost fund transfers.
In March 2022, Nepal adopted UPI for digital transactions. NIPL signed a deal with the authorized payment system operator of Nepal. Their names are Manam Infotech (India) and Gateway Payments Service Pvt Ltd (Nepal) respectively.
Thus, UPI was deployed in Nepal to boost interoperable real-time P2P and P2M-based payment systems. (Note: P2P and P2M refer to Person to Person and Person to Merchant respectively).
In October 2022, Oman also opened its arms to UPI. An MoU was signed between NPCI and CBO (Central Bank of Oman). The objective was to integrate UPI into the Omani payment system. This agreement enabled Indian RuPay cards and the UPI platform to facilitate digital remittances. This was delightful news for the Indian workers and professionals residing in Oman.
In November 2021, NIPL partnered with the following companies to enable UPI in UAE-
- LuLu Financial Holding
- Mashreq Bank
- Network International
Thus, in April 2022, UPI was launched in the UAE through Mashreq’s NeoPay. This partnership is aimed at empowering the payment system for millions of Indians who reside, work, and travel to the UAE.
NIPL signed an agreement with the leading fintech company and largest Money Services Business Operator in Malaysia. That is “Merchantrade Asia Sdn. Bhd.” They offer real-time remittances to India through the UPI platform.
7. United Kingdom
In August 2022, the United Kingdom joined the Indian digital payments through the companies Terrapay and PayXpert. This move was to facilitate customer-related benefits to European merchants and to facilitate spending from Indian tourists.
In July this year (2023), our honorable Prime Minister announced the implementation of India’s UPI payment mechanism in France. Do you know where it started? From the famous Eiffel Tower. This step will allow Indian tourists and travelers to make payments in Indian rupee while traveling to France. This marked a significant bilateral trade development between the two countries.
9. Other Countries
Some other countries that entered into a written Mou with India to allow UPI are-
- Hong Kong
- South Korea
One of the significant companies that made this possible was “Liquid Group.” In October 2022, the global leader of payment services in Europe i.e. “Worldline” tied up with NIPL. Here also, the objective was to expand the Indian UPI payment system in Europe.
PhonePe was the first Indian fintech firm to support cross-border UPI payments. If you are a PhonePe user, then you will gain exclusive benefits. How? See, through PhonePe you can pay through your Indian bank accounts to merchant’s outlets or points of sale in four major countries. Namely-
Thereafter, Paytm also announced that it will also launch UPI Global payments.
But which is better PhonePe or Paytm? To get deep info, visit the article “Paytm vs Paytm: Which one is winning the UPI race?”
How to use UPI Abroad?
To make transactions easier for Indians abroad, the GOI has been on a mission to make UPI payments available in many foreign countries. Not only it will benefit travelers but also NRIs (Non-Residents Indians). NRIs can use UPI to pay for goods and services at Indian merchant outlets.
You must note that the method of using UPI registration will be different for NRIs and travelers. Also, your transactions will be subjected to different types of fees –
- Conversion Charges
- Foreign Exchange Charges
Now, let’s look at the steps for using UPI in foreign countries-
(A) For travelers or common Indians
Download a UPI-enabled mobile app (PhonePe, Paytm, Google Pay, or any other UPI-enabled app provided by the foreign country).
Register your bank account in the app and link it with the app.
Provide the recipient’s details including bank account number, IBAN, and BIC.
Enter the transfer amount and currency.
On the completion of the transaction process, you will receive a confirmation sms or email.
(B) For NRIs who want to make Payments to Indians having UPI ID
Download a UPI-enabled mobile app
Register NRE or NRO account with the app
Provide your Indian mobile number and bank account details. And link them to the app.
Enter the Indian phone number of the recipient and make the payment.
Quite simple! Right? That’s why UPI’s popularity is increasing crazily in India.
Unlocking Boundless Potential: The Global Reach of UPI and Its Benefits for Indians
Do you know who will benefit the most if UPI becomes a global phenomenon? Indian! Yes, they will gain a multitude of benefits that extend beyond their domestic financial interactions.
Let’s look at some advantages that you as an Indian can experience if UPI achieves global recognition-
1. Simplified Cross-Border Transactions
Indians traveling or conducting business abroad would enjoy the same level of ease and convenience in making transactions as they do domestically. UPI’s user-friendly interface and real-time processing would streamline international payments and reduce the complexities associated with traditional cross-border transfers.
2. Cost Savings
International transactions often come with high fees and unfavorable exchange rates. If UPI becomes global, Indians would benefit from the platform’s cost-effectiveness. This will minimize the financial burden associated with cross-border money transfers.
3. Enhanced Financial Inclusion
UPI’s global expansion would enable Indians living or working in other countries to access modern financial services more easily. This would contribute to their financial inclusion, allowing them to manage their finances, and make payments. Thus, you can engage in transactions with greater convenience and security.
4. Simplified Remittances
Indians working abroad often send remittances back home. UPI’s global presence would simplify this process, enabling seamless and instantaneous remittances, thereby benefiting families and loved ones who rely on these funds.
5. Economic Empowerment
As more Indians engage in cross-border trade, investments, and collaborations. UPI’s efficiency would empower individuals and businesses to explore international opportunities without being hindered by cumbersome payment systems.
6. Global E-Commerce and Business
Indian entrepreneurs and businesses would find it easier to participate in the global e-commerce ecosystem. UPI’s integration with various platforms could open doors for Indian products and services to be easily marketed and sold on an international scale.
7. Digital Diplomacy
UPI’s global presence could also foster positive international relations. It will showcase India’s technological prowess and its commitment to modernizing financial systems. It could be a point of pride and a symbol of India’s global influence.
Thus, the global recognition of UPI would empower Indians in many ways. Such as enhanced financial access, cost savings, and opportunities for growth on the international stage. It would mark a significant step towards a borderless financial ecosystem, benefiting both individuals and the nation’s economic prospects.
Navigating the World Stage: Challenges and Considerations in Taking UPI Global
Now the question comes- How will India regulate UPI at the global level? Well, it’s not going to be as easy as it sounds. The global UPI initiative is full of challenges. Let’s look at them one by one-
1. Regulatory Harmonization
Navigating diverse international regulatory frameworks and ensuring compliance with varying data protection is going to be a bit difficult. The financial regulations could pose a significant challenge for UPI’s global expansion.
It refers to the smooth function of UPI in both national and international platforms (mobile apps). Establishing seamless interoperability between UPI and other global payment systems is another challenge that India may face. Because every country has its standards and protocols. Thus, the interoperability will require complex technical adjustments.
3. Cybersecurity and Fraud Prevention
With an expanded user base, UPI will need to enhance its cybersecurity measures. Reason? To protect against a wider range of cyber threats and potential fraud attempts.
4. Currency Conversion and FX Rates
Handling currency conversion and foreign exchange rates in real-time for international transactions could add complexity to UPI’s operations. Eventually, this may impact cost-effectiveness for users.
5. Competition from established players
UPI might face competition from established global payment giants. Thus, it will need to opt for unique strategies to carve out its unique value proposition and market positioning.
Navigating these challenges will be essential for UPI to successfully transition from a national payment system to a globally recognized and trusted platform.
Final Words & Way Forward
Born in 2016, UPI’s simplicity and interoperability bridged the gap between banks and users, making peer-to-peer transactions a breeze. With 24/7 availability, instant transfers, and minimal friction, it rode the smartphone wave, reaching all corners of the diverse population.
Government support, backing from major banks, and a plethora of compatible apps further propelled its meteoric rise. UPI became the glue binding a cash-reliant society to the promise of a cashless future, democratizing transactions and empowering millions to transact with a tap.
The Unified Payments Interface (UPI) is gaining global acceptance, with several countries adopting it. France, Singapore, UAE, Oman, Bhutan, Nepal, Saudi Arabia, Malaysia, and BENELUX are among the countries that have embraced UPI for cross-border transactions. India has also signed Memorandums of Understanding (MoUs) with countries like Malaysia, the Philippines, South Korea, and others to expand the reach of UPI internationally.
This global adoption of UPI presents significant opportunities for Indians and enhances the convenience and accessibility of digital payments across borders.