A. UPI for NRIs:
NRIs (Non-Resident Indians) of 10 countries can link their international mobile numbers to their NRE/NRO accounts and enjoy UPI payments.
Singapore, Australia, Canada, Hong Kong, Oman, Qatar, USA, Saudi Arabia, UAE, UK
Member banks should follow FEMA guidelines and be responsible for adhering to Anti-Money Laundering (AML) and Combating of Financing of Terrorism (CFT) checks.
As per guideline, all member banks should be ready by 30th Apr 2023.
Now when NRIs come to India, along with Bisleri water bottles and accented English, they can show off their UPI App. Hurray!
B. UPI One World
UPI is made available to tourists visiting India so they do not have to carry India Rupees (after converting their home currencies) or have to their credit/debit cards of their home countries (and incur forex charges).
UPI One World is launched in partnership between FFMC (Full Fledged Money Changers), PPI (Prepaid Payment Instrument) issuers and (of course) UPI infrastructure.
PPI issuers: ICICI Bank, IDFC First Bank, Pine Labs and Transcorp
FFMC: EBIX CASH, Thomas Cook
At present, only tourists from G20 Countries can avail UPI One World at selected entry points — Bangalore, Mumbai and Delhi.
This is just the beginning and UPI One World will be extended to all inbound visitors across all entry ports in India.
C. UPI Outside India
Let’s talk about Indian tourists who visit other countries.
Indian travellers can pay using UPI in 20 countries:
- East Asia: Bhutan, Cambodia, Hong Kong, Japan, Malaysia, Nepal, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam
- Middle East: Oman, UAE
- Europe: Belgium, France, Luxemburg, Netherlands, Switzerland, UK
Recently, PhonePe enabled this feature… Kudos!
Drawback: Outside India, when you make payment using INR (via, UPI) the user will have to bear the forex charges may fluctuate. That is the reason, people use forex cards on foreign trips.
Wait… wait…
Forex card… Forex cards are nothing but prepaid cards where users can load foreign currency. (Load INR and get balance in foreign currency e.g. USD, Euro, Pound etc.)
Considering UPI + PPI linking is available…. The model can be extended to forex wallets and users would be able to transact in foreign currency and safeguard from forex fluctuations.
Of course, there are a lot of challenges in terms of KYC, compliance, limits, usage and acceptance network…. But when there is a will there is a way (in this case UPI)
D. Increasing Footprint:
You may wonder, it may take a lot of time to cover all major countries
It may not…
NIPL (NPCI International Pvt. Ltd.) is forging partnerships with global FinTechs to increase the coverage faster.
E.g., With partnership with Liquid Group, UPI reached 10 Countries in North and South East Asia.
And Recently, NIPL partnered with UK based FinTech, PPRO. And it is possible that NIPL will forge similar partnerships with other global FinTechs and Payments companies.
E. PayNow and UPI connectivity
In Sep’21, India and Singapore signed MoU (Memorandum of Understanding) to link UPI (we know this) and PayNow (Real-time transfer P2P and P2M transfer rail of Singapore… in simple words, Singapore’s UPI)
In Feb ’23, the linking of UPI and PayNow was ‘officially launched’ when the RBI Governor and MAS’s MD did token transfers. The event was witnessed by PMs of both countries. So considering the dignitaries involved in the launch, you can guess the importance of this connectivity.
Note: NPCI is already in discussion with Thailand to connect PromptPay and UPI.
That’s not it… I am sure NPCI will keep building connectivity with payment rails of other countries such as Australia (PayId), Malaysia (DuitNow), Brazil (Pix) so as to make the remittance easier and more efficient.
F. BBPS for NRIs:
As we are on the topic of internationalisation of Indian Payment systems — Let me quickly cover a small topic on BBPS. If you are not familiar with BBPS then read this article.
Everyone pays bills — even the Indians who are living abroad pay bills in India. It could be for them or for their families back home.
Now the users based out of India can make bill payment via BBPS.
At present, this is live in three countries
- UAE (Lulu Exchange in partnership with Federal Bank)
- Kuwait (Al-Mazaini Exchange)
- Oman (Musandam Exchange in partnership with Canara Bank)
Just to clarify, ‘exchanges’ are the entities that provide cross-border remittance service and they have physical branches as well as online portals/Apps. So the migrant population is quite familiar with ‘exchanges’ and logically it makes sense for an exchange to offer bill payment service.
Working:
Bill-fetch and bill payment APIs will remain same as regular BBPS flow except the amount is shown in local currency
Exchange will have RDA (Rupee Drawing Arrangement) with the bank which is acting as COU.
Customer will make the payment in AED (local currency) and basis the exchange’ instruction, the COU bank will move funds from RDA to Biller (via NPCI and BOU)
Bill payment facility for NRIs is a good use case but the success of this model purely depends on ‘charges’.
G. Trading Accounts:
Banks from 18 countries (list) have opened ‘Special Vostro Rupee Account (SVRP)’ that will allow cross-border trade settlement in Indian Rupees.
Countries: Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, the UK.
Indian Banks that are opening SVRAs: UCO, IndusInd, UBI, Canara, HDFC, Yes, SBI, IDBI, Indian Bank, PNB, BOB, Axis and ICICI.
Vostro Account: When a bank maintains a local or home currency account of a foreign bank or branch in its own country it is called a Vostro account E.g. JP Morgan holding an account with ICICI in India
Russia is one of the first countries to use INR trade settlement but now they have ‘a lot’ of INR (of trade surplus) sitting in accounts which they can’t use (Russia is facing that problem)
So the success of this model depends on whether the trade surplus can be used elsewhere.
I. Cards
Recently, Government of India (GOI) announced that Credit card payment done on international spending will come under LRS (Liberalised Remittance Scheme) and 20% TCS (tax collection at Source) will be applicable.
Meaning: Instead of Rs.1 lakh, you will pay Rs.1.2 lakh and then get Rs.20Kit reimbursed during Income Tax Return.
Anyway, GOI amended the guidelines…. TCS will not be applicable for the amount up to Rs.7 lakh per year. Wonderful!
FYI: TCS is not applicable for payments done for education or medical purposes. And also, not applicable for spends done on corporate cards…!
On a separate note… RBI has allowed banks to issue RuPay Forex cards.
‘Internationalising’ is not new… Basmati Rice, Mangoes, Butter Chicken, IT services, movies, many CEOs of Fortune 500 companies…. and the list goes on and on…
This time… India is on the path of internationalising India’s payment platforms and establishing INR as the dominant currency on the world map.
So… Onwards, upwards and OUTWARDS!
