Context

India and Singapore has 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.

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.

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 bank 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” collect 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.
  
  

PayNow PayNow 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.

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.
• Digital rupee will be settled by RBI instantly, whereas UPI payments were settled by transacting bank with RBI.