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India, Singapore launch UPI-PayNow linkage
Context
India and Singapore have announced to link their payment apps, namely UPI and PayNow which will allow instantaneous and low-cost money transfers between the two countries.
- The linkage is set to ease financial transactions for the Indian diaspora.
About
About the move:
- Background: UPI payments through QR codes are already taking place in Singapore, though at a limited number of outlets.
- The announcement was done via a virtual address by both India and Singapore’s Prime minister.
- Aim: This move will aid the Indian diaspora in Singapore, especially students and migrant workers, by allowing instantaneous and low-cost money transfers between the two countries.
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Singapore has now become the first country with which cross-border Person to Person (P2P) payment facilities have been launched. |
Significance:
- This will help the Indian diaspora in Singapore and bring the benefits of digitalisation.
- It will also help FINTECH through instantaneous and low-cost transfer of money from Singapore to India and vice-versa.
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FINTECH or financial technology refers to the technological innovation in the design and delivery of financial services and products. |
Unified Payments Interface (UPI):
- Unified Payments Interface (UPI) is a system that powers multiple banks accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
- It also caters to the “Peer to Peer” collection request which can be scheduled and paid as per requirement and convenience.
- Currently, UPI payments are made using the digital equivalent of existing currency notes. That means every rupee transferred via UPI is backed by physical currency.
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The digital rupee will be legal tender in and of itself and need not necessarily be backed up by physical currency. |
Authorities concerned:
- The digital rupee/ currency will be operated by RBI and not by bank intermediaries in the case of UPI where each bank has a different UPI handler.
- The digital rupee will be settled by RBI instantly, whereas UPI payments are settled by transacting banks with RBI.
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