Digital transactions to soon exceed cash in India: PM Modi

New Delhi:  As people take to India’s real-time payment mechanism, the Unified Payments Interface (UPI), Prime Minister Narendra Modi on Tuesday expressed hope that digital transactions will soon surpass cash payments in the country. The PM was speaking after India and Singapore together launched a real-time payment link to facilitate easier cross-border money transfers between the two countries. With the tie-up between India's UPI and Singapore’s PayNow facility, fund transfers between the two nations will be possible using just mobile phones.

"This will enable people from both the countries to immediately transfer funds at low-cost by just using their mobile phones. Besides, the linkage will also help migrant workers, professionals, students and their families as well," Mr Modi said, while launching the service at a virtual event through token transactions by Reserve Bank of India governor Shaktikanta Das and managing director of the monetary authority of Singapore Ravi Menon using the UPI-PayNow linkage.

Mr Modi stressed that the digital payment linkage is a new milestone in India-Singapore relations that will allow people in both countries to conduct cross-border transactions via mobile phone at an affordable cost.

"Singapore is the first country with which a cross-border person-to-person or P2P payment facility has been launched. It will help the Indian diaspora in Singapore and bring the benefits of digitalisation and fintech to the common man through instantaneous and low-cost money transfers from Singapore to India and vice versa," he said.

The Prime Minister and his Singaporean counterpart Lee Hsien Loong witnessed the historic launch of cross-border connectivity between two payment systems via videoconference. After the launch, the Prime Minister said that about 74 billion transactions amounting to more than Rs. 126 trillion, which is approximately SGD (Singapore dollars) 2 trillion, were done through UPI in 2022.

"Many experts are estimating that soon India’s digital wallet transactions are going to overtake cash transactions," he said, adding that a large number of UPI transactions demonstrate that this indigenously designed payment system is very secure," he said.

Singapore's Prime Minister said that the idea of linking PayNow and UPI was first conceived in 2018 during Mr Modi's visit to Singapore. "Since then, our two Central banks have been working on this in earnest. Digital connectivity was also a key topic discussed at the inaugural India-Singapore ministerial roundtable, which was held in New Delhi last September. So I am very glad that the linkage has now become a reality," Mr Lee said, adding, "as we progressively add more users and use cases, the PayNow-UPI linkage will grow in utility and contribute more to facilitating our trade and our people-to-people links."

Highlighting his government's efforts to promote innovation and modernisation, Mr Modi said that the Digital India programme has improved "ease of living", "ease of doing business’, digital connectivity and financial inclusion. "The Digital India has brought in significant reforms in governance and public service delivery. The linkage will enable users of the two fast payment systems in either country to make convenient, safe, instant, and cost-effective cross-border fund transfers using their respective mobile apps," he said.

In a statement, the RBI said that funds held in bank accounts or e-wallets can be transferred to or from India using just the UPI-ID, mobile number or virtual payment address. "To begin with, State Bank of India, Indian Overseas Bank, Indian Bank and ICICI Bank will facilitate both inward and outward remittances, while Axis Bank and DBS India will facilitate inward remittances."

For Singapore users, the service will be made available through DBS-Singapore and Liquid Group -- a non-bank financial institution. More banks will be included in the linkage over time. Customers of the above participating banks can undertake cross-border remittances to Singapore using the bank's mobile banking app or internet banking. "To begin with, an Indian user can remit up to Rs 60,000 in a day (equivalent to around SGD 1,000). At the time of making the transaction, the system shall dynamically calculate and display the amount in both currencies for the convenience of the user," the statement said, adding that the interlinkage also aligns with the G-20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments.