ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 10th August. Click Here for more information.
Source: The post is based on the article “UPI: Local & global” published in Business Standard on 23rd February 2023.
Syllabus: GS 3 – Indian Economy and issues relating to planning, mobilization, of resources.
Relevance: About e-rupee and UPI.
News: Recently, India’s Unified Payments Interface (UPI) was linked to Singapore’s version PayNow.
About the linking of India’s UPI and PayNow
| Read here: India’s UPI and Singapore’s PayNow are now integrated: What it means, who benefits |
It will enable users to send funds via a UPI ID, mobile number, or virtual payment address via Singapore PayNow up to a limit of Rs 60,000 a day.
The transfer agents will be limited to a handful of Indian banks — State Bank of India, Indian Bank, Indian Overseas Bank, and ICICI Bank — that can enable transactions via their banking facilities or mobile apps.
The UPI is truly inclusive since it could bring within its ambit the thousands of workers who have to rely on relatively slow online money transfers via service providers who charge fairly steep fees.
Note: Third-party app providers — such as PhonePe, Google Pay, or Paytm — remain outside the purview of this international link. But, these big three account for more than 90% of transactions both in terms of number and value. Hence, in future the link might extend to them.
About the success of UPI
By 2021, five years after it was introduced as a bank-to-bank pilot project in April 2016, the UPI has become the world’s fifth-largest payment network by volume, behind Visa, Alipay, WeChat Pay, and Mastercard. The major advantages of the system are,
a) The ubiquity of UPI across incomes and geographies of India, b) UPI’s acceptance has encouraged greater financial inclusion at low cost, c) UPI has gained credibility and traction in India to the extent to achieve digital economy, and d) UPI’s simple and secure architecture has reduced the level of vulnerability in the system.
What should be done to improve UPI’s interface?
According to RBI data, Singapore’s share of inward remittances is just 5.7%. The real value and test of UPI will happen if their scope were extended to the Gulf countries, or the US and Canada, which dominate the inward-remittance geographies.
The exponential expansion of the UPI system has been accompanied by a rise in frauds, though they occur mostly on account of user ignorance rather than hacks. These should be addressed immediately.
| Read more: UPI promotion should not eclipse our e-rupee and Popularize the e-rupee even at the cost of UPI |
