- Prime Ministers Lee and Modi laud connection of finance infrastructure
According to Nikkei Asia article published on February 21, 2023, Singapore on Tuesday launched a new digital payments connection with India, following similar plans made previously with Thailand and Malaysia as the Asian finance hub strives to become a regional nexus for transactions worth billions of dollars.
The initiative, backed by the Monetary Authority of Singapore and the Reserve Bank of India, links Singapore's PayNow digital payments infrastructure with India's Unified Payments Interface.
This is set up to allow real-time virtual transfers of money across borders in seconds, and has been billed as a means to reduce the cost and inefficiencies of remittances between both countries.
"Our two central banks have been working on this in earnest," Singapore's Prime Minister Lee Hsien Loong said on Tuesday, observing the launch of the payments initiative with his Indian counterpart Narendra Modi via a video link.
"We are taking retail payments connectivity another step forward," he added. "The PayNow-UPI linkage will offer cheaper, faster, and safer cross-border retail payments and remittances, for businesses and individuals alike, directly between bank accounts."
Singapore has a sizable presence of Indian workers who use remittance agents to transfer money to their families back home but these transactions typically take a few days.
Global remittance flows to India reached $100 billion last year, with annual remittance from Singapore to the South Asian country estimated at $1 billion, according to World Bank data.
The MAS said the PayNow-UPI link is the world's first real-time payments system that offers scalable digital services based on cloud technology. The system will be able to deal with future increases in remittance volume.
DBS Group Holdings, Southeast Asia's largest lender by total assets, and financial technology outfit Liquid Group, are the two companies in Singapore able to offer the payments linkage to their customers.
DBS said on Tuesday that the PayNow-UPI connection will be progressively rolled out for its clients to allow them to get familiar with the service. For a start, selected customers will be able to use it to transfer funds of up to 200 Singapore dollars ($149) each time and up to SG$500 per day.
By end-March, the service will be extended to all clients who will then be able to transfer funds of up to SG$1,000 a day. The bank said there are currently no extra fees for the transactions on its end.
"We believe in collectively harnessing technology to expand access to fast and seamless cross-border payment services," said Shee Tse Koon, DBS Singapore country head. "With India being one of DBS' biggest markets for overseas remittances, this is a particularly welcome addition to our wide-ranging suite of payment solutions."
In India, customers of ICICI Bank, Indian Bank, Indian Overseas Bank and the State Bank of India will be able to send funds to Singapore via the link between both countries. There are plans for this group to be enlarged.
With the India link, Singapore adds another country to its growing plans for mass-market digital payment connections with other countries. In May 2021, the city-state launched a funds transfer service that linked PayNow to its counterpart in Thailand, PromptPay.
DBS, which also participated in the initiative, said that at the end of last year, both the number of PayNow-PromptPay transactions and customers had increased fourfold since the launch. Malaysia has also been tied to Singapore in this area.
The MAS announced previously that PayNow and Malaysia's DuitNow will have real-time linkage in the fourth quarter of last year, with features and participants of the connection to be expanded over time. This has since been pushed back, as details around dispute resolution mechanisms and agreements between payment operators are still being worked out.
Singapore's link to India was also supposed to have been launched earlier, and finally went live on Tuesday, with participating financial institutions making a commitment to keep the service cost-efficient and accessible to foreign workers and students of both countries.
"The launch of the UPI-PayNow link is a gift to the citizens of both the countries," Modi said at the launch. "Today is the beginning of a new era, a new chapter in cross-border fintech connectivity."
