Tangible benefits of the agreement include the availability of real-time and cost-effective cross-border remittances for the users of both countries
NPCI International Payments Ltd, the international arm of the National Payment Corporation of India, on Thursday signed an agreement with Al Etihad Payments of UAE to provide real-time and cost-effective cross-border remittances for the users of both countries. According to the agreement, it will be as seamless as a domestic transaction, using a beneficiary identifier (mobile number VPA).
Tangible benefits of the agreement include the availability of real-time and cost-effective cross-border remittances for the users of both countries. This would also enhance the transparency for users through an upfront display of remittance amounts in both currencies with applicable charges.
The linkage of card switches would enable the cardholders to use their domestic cards (without the need to have global cards issued) in each other’s jurisdiction on a reciprocal basis on ATMs, PoS terminals and e-comm transactions. Further, the linkage of messaging platforms would reduce dependency on multilateral systems like SWIFT, and this shall not only be cost-effective but would also provide comfort to both countries in view of the present geo-political situation.
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The objectives of the agreement include integrating the Unified Payments Interface (UPI) of India and the Instant Payments Platform (IPP) of the UAE, to process cross-border transactions between two countries more efficiently; and interlinking card switches of the two countries — RuPay switch and UAESWITCH — to facilitate the mutual acceptance of their domestic cards and processing of card transactions directly without relying on any other network. The Central Bank of the UAE introduced UAESWITCH in 1996 to link the Automated Teller Machine (ATM) network of all banks in the UAE, enabling customers of different banks to use any ATM and Point of Sale (POS) facilities in the UAE.
The agreement was signed in the presence of Commerce and Industry Minister Piyush Goyal, who is leading a business delegation here on October 5-6. Goyal also co-chaired the eleventh meeting of the India-UAE High-Level Task Force on Investments (HLTFI) along with Sheikh Hamed Bin Zayed Al Nahyan, Managing Director of Abu Dhabi Investment Authority.
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The move assumes significance as there are about 3.5 million Indian expatriates living in the UAE, remitting a total of about USD 20 billion annually to India. About 2.3 million Indian expatriates work in blue-collar jobs. This demographic in the UAE is underbanked and financially excluded from mainstream banking.
This creates a unique corridor of opportunity between India and the UAE for various digital solutions in the area of digital payments, connecting the Indian diaspora in the UAE as well as their families in India. The Reserve Bank of India (RBI), along with NPCI International Payments Limited (NIPL), has been engaging with the Central Bank of the UAE (CBUAE) to link fast payment systems (FPS) and bilateral acceptance of domestic cards between India and the UAE.
Following several rounds of discussions in this regard, including a meeting between the RBI and CBUAE (The Central Bank of the UAE) in January this year, CBUAE shared a draft MOU for collaboration on linkages of FPS, cards, and messaging systems. In 2022, the National Payments Corporation Of India (NPCI), the umbrella organisation that offers UPI services, signed an MoU with France’s fast and secure online payment system called Lyra.
In 2023, UPI and Singapore’s PayNow signed an agreement, allowing users in either country to make cross-border transactions. The UAE, Bhutan, and Nepal have already adopted the UPI payment system.
NPCI International is in talks to extend UPI services in the US, European countries, and West Asia. UPI is an instant real-time payment system developed by NPCI facilitating inter-bank transactions.
(With Inputs From PTI)
