Digital India Initiatives

UPI: Internationalization of Digital Payments


From UPSC perspective, the following things are important :

Prelims level: UPI, PayNow link, UPI LITE, etc

Mains level: UPI and Internationalization of Digital Payments architecture


Central Idea

  • On Tuesday, the Union government unveiled India’s first cross-border real-time payments systems linkage, with the Unified Payments Interface (UPI) connecting with Singapore’s PayNow payment system.

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What is Unified Payments Interface (UPI)

  • UPI is India’s mobile-based fast payment system, which facilitates customers to make round-the-clock payments instantly, using a Virtual Payment Address (VPA) created by the customer.
  • It eliminates the risk of sharing bank account details by the remitter.
  • UPI supports both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments and it also enables a user to send or receive money.

What is PayNow?

  • It is a fast payment system in Singapore.
  • It enables peer-to-peer funds transfer service, available to retail customers through participating banks and Non-Bank Financial Institutions (NFIs) in Singapore.
  • It allows users to send and receive instant funds from one bank or e-wallet account to another in Singapore by using just their mobile number, Singapore National Registration Identity Card (NRIC)/Foreign Identification Number (FIN), or VPA.


Overview: Remarkable success of UPI

  • Changed the landscape of electronic payments: The introduction of UPI in 2016-17 led to a dramatic change in the electronic payments landscape of the country.
  • Instrumental in dramatic growth of digital payments: Along with the JAM trinity of Jan Dhan, Aadhaar and mobile phones, this payment architecture has been instrumental in facilitating the dramatic growth of digital payments in the country, aided by a conducive regulatory framework.
  • Value and volume increasing day by day: Over the years, various reports by the RBI have documented the significant increase in digital payments transactions in the country, with per person digital transactions growing both in terms of value and volume.
  • Dramatic surge during the pandemic: Contactless payments also witnessed a surge during the pandemic. In fact, as per another study, roughly one-third of households surveyed had transacted digitally for the first time during the lockdown.
  • Statistics for instance:
  1. In January 2023, roughly 8 billion transactions were carried out on the UPI platform, whose value touched almost Rs 13 lakh crore.
  2. In comparison, in January 2020, just prior to the pandemic, 1.3 billion transactions were routed through the UPI platform, which touched Rs 2.1 lakh crore in value.
  • Aided in accelerating financial inclusion: The convenience of real-time transfer of payments, the zero-cost framework for users, the rapid expansion in the acceptance touch-points, have encouraged its widespread adoption. This has also aided in accelerating financial inclusion by providing access to financial services at low cost.

Did you know? “UPI Lite”

  • UPI Lite is a on device wallet feature similar to the ones seen on popular digital payment apps such as Paytm, Freecharge, MobiKwik and others.
  • The feature will allow you to make faster near real-time small value payments without internet connection via the money added in the wallet.
  • In phase one, UPI Lite will process transactions in near offline mode i.e. debit offline and credit online, and at a later point, UPI Lite will process transactions in complete offline mode i.e. debit and credit both offline.


All you need to know about UPI-PayNow interlinkage facility

  • How is the interlinkage benefit users?
  1. With this facility, funds held in bank accounts or e-wallets can be transferred to /from India using just the UPI ID, mobile number, or Virtual Payment Address (VPA), which is essentially the address to or through which you can make UPI money transfers.
  2. With this payment facility, both inward and outward remittances will happen instantly.
  • Who can undertake remittance transactions through this facility: Account holders of participating banks and financial institutions in India and Singapore.
  • Participating banks in India and Singapore:
  1. Banks from India are Axis Bank, DBS Bank India, ICICI Bank, Indian Bank, Indian Overseas Bank and State Bank of India (SBI). Going forward, the UPI-PayNow interlinkage will cover more banks and financial institutions.
  2. From Singapore, DBS Bank Singapore and Liquid Group (Non-Bank Financial Institution) are selected.
  3. Popular payment platforms such as PhonePe and Google Pay have been excluded from the ambit of this framework. Perhaps, over time, these platforms will also be brought under this framework, aiding in its widespread adoption.
  • The daily transaction limit:
  1. Banks in India have not communicated about any restrictions on transfers yet.
  2. It is Rs 60,000 (around SGD 1,000). Initially, DBS customers can use PayNow-UPI only to transfer funds up to SGD 200 per transaction, capped at SGD 500 per day.
  3. There is no such communication about capping for transferring funds through Liquid Group (Non-Bank Financial Institution) to India.



  • The UPI-PayNow interlinkage is a milestone moment for cross-border transfers. Not only India but the world has witnessed how UPI revolutionized the landscape of domestic digital payment infrastructure. With this encouraging development we are now going to see a similar revolution in the cross-border payments space as well. This internationalization of the digital payments architecture, will help bring down both the cost and the time associated with such transfers, bringing benefits to migrant workers, students, and professionals, among others.

Mains Question

Q. Recently India launched its first cross-border real-time payments systems linkage with Singapore. In this light highlight Discuss remarkable success of UPI and prospect of internationalization of UPI.

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