UPI for NRIs: A game-changing proposition for international remittances

Within six years of its launch, the Unified Payment Interface (UPI) has not only disrupted the country’s digital payments landscape but also gained global recognition. Between 2021 and 2022, the volume of UPI transactions jumped by over 90% and the value by 76%. For a diverse and complex geography like India, the success of UPI is remarkable, for it brought digital payments closer to the tech savvy as well as to the masses.

The innovative platform’s ease of use and acceptance has transformed the way Indians make payments and fund transfers. However, non-resident Indians (NRI) did not have access to this service, until now.

Game changer: NPCI’s (National Payments Corporation of India) notification allowing NRIs to link their international mobile numbers with UPI for payments and fund transfer is a step in the right direction with potentially game changing results. India is the world’s largest international remittance (IR) destination. According to the World Bank, for the first time, a single country, India, is on track to receiving more than $100 billion in yearly remittances in 2022, up from over $89 billion in 2021. Looking at the IR trends, UPI is well placed to replicate the domestic success by tapping the demand for international payments. With their request to allow UPI becoming a reality now, NRIs would be keen to make the most of this platform for seamless and safe transactions.

To start with, NPCI has allowed NRIs from 10 countries—Singapore, Australia, Canada, Hong Kong, Oman, Qatar, US, Saudi Arabia, United Arab Emirates and the United Kingdom—to avail UPI services to send and receive money. Interestingly, the US and the UAE markets are the biggest remitters to India.

NRIs can use the service only if their domestic bank accounts such as Non Resident External (NRE) and Non Resident Ordinary (NRO) are linked to their international phone numbers. An NRE bank account allows NRIs to park their foreign earnings in the country. An NRO bank account helps them manage the income earned in India. These incomes include rent, dividend, pension, interest, etc.

Advantages aplenty: With an estimated 18 million expats, Indians constitute the world’s largest diaspora group. For the large working population and students abroad, enabling UPI for international transactions has significant advantages.

Safety: UPI uses virtual ID for a transaction, making it more secure as bank account details are not shared. Further, UPI’s stringent guidelines to comply with Anti-Money Laundering and Combating the Financing of Terrorism regulations is a great safety net.

Faster service: Being a digital and phone-based platform, UPI facilitates faster remittance compared to other options currently in use. This is especially beneficial during emergency situations such as medical situations, payment of student fees, etc. NRIs can also pay domestic utility bills instantly using their UPI ID.

Low cost: As per Remittances Prices Worldwide Database of the World Bank, the cost of sending $200 to a South Asian country, including India, is 4.1% on an average. UPI enables easier, faster and cheaper remittance services.

Reduced dependency: With UPI, one can make payments and fund transfers directly to the intended beneficiary without the need to route through a friend or relative’s bank accounts.

Simplified payments: All that NRIs need to do is to link their NRE and NRO accounts that are linked to their international SIM to UPI. Once a virtual ID is created, one can use it like a regular Indian UPI user for making any merchant or P2P payment.

Social value: The NRI gets to showcase UPI as a world class product to their peers overseas. The ability to say this is good social currency. UPI as a payment tool today is an intrinsic part of the daily lives of common Indians. This as a mode of sending money home just seamlessly fits into their everyday lives. For domestic banks, including payments banks, this is a window of opportunity to garner NRI deposits and enable seamless digital transactions. With significant rural reach, we expect the new UPI initiative to further deepen the use of digital payments in Bharat.

For India, UPI is a story of the country’s strong fintech ecosystem driven by the desire to innovate for greater good and bigger impact, with customer at the centre.

Ashish Ahuja is COO at Fino Payments Bank

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