India aims expanding two homegrown payment platforms’s impressive reach, with plans underway towards launching United Payments Interface (UPI) services in Sri Lanka and Mauritius while debuting the RuPay payments card network in Mauritius this year. The moves signal commitments providing neighboring regions access to efficient payment mechanisms, while fostering financial collaboration.
The Scalable Indian Model
- UPI’s layered modular architecture fueled exponential transaction growth since 2016 launch, now exceeding 5 billion monthly payments worth over $130 billion by 2022.
- Both UPI and RuPay as domestic interoperable platforms demonstrate templates ensuring security and affordability when payments adoption scales across wider demographics.
- Open loop RuPay cards maintain roughly 30% Indian market share given acceptance across ATMs and POS terminals, while closed UPI architecture eased onboarding mobile apps.
- Interoperability must balance ease for developers linking diverse apps with consumer protections and transaction integrity as key principles adopted by India’s model.
UPI Launch Framework
Mauritius
- The Indian and Sri Lankan Central Bank governors announced coordinated efforts support UPI rollout next fiscal year allowing real-time bank account transfers.
- Local Mauritian banks collaborate with India’s National Payments Corporation to enable mobile app and SMS-based UPI transactions for consumers.
- Officials emphasized UPI enhancing tourism sectors through demonstrating commitment to digital economy alignment and de-dollarization.
RuPay’s Mauritius Debut
- Cards issuance begins across major Mauritian banks before July 2023 per Central Bank mandate, aiding the 60% unbanked population by ensuring low-cost access.
- RuPay network further compliance for banks facing new transaction processing requirements, while boosting consumer protections against fraud.
Payments Progress in Partner Nations
- Mauritius established a payments platform development roadmap including QR code standardization to integrate mobile and card mechanisms.
- Sri Lanka’s domestic payment switch merges disparate public and private bank networks. UPI integrates the real-time infrastructure as the next phase expanding access.
- Regional case studies demonstrate payments digitization effectivity – Pakistan grew digital transactions over 331% from 2019-2021 after enabling biometric accounts with millions of citizens.
Strategic Goals Furthered
- Extending indigenized payment networks fosters goodwill through advancing self-reliant capabilities aligning with PM Modi’s Panchamrit principles.
- UPI and RuPay adoption follows India positioning itself as a net security provider of public goods amist geopolitical flux.
Milestones under UPI Growth
- UPI crossed 7.82 billion transactions in January 2023, surging over 121% annually, led by small value Peer-to-Peer (P2P) transfers becoming ubiquitous for payments.
- Fast adoption is further seen in over 70 billion app installs for UPI apps like Google Pay or PhonePe. Screens showcasing QR codes now commonplace for merchant payments across cities and towns.
New International Expansion Developments
- January 2023 marked Bhutan launching BHIM-UPI nationwide in partnership with India’s NPCI, allowing instant domestic and cross-border merchant payments and top-up availability across 100,000+ retail touchpoints. This followed similar debuts in Singapore and UAE.
- India recently set up an International Trade Settlement in INR to expand avenues for global UPI and RuPay usage easing international education and medical tourism payments.
Increasing Financial Inclusion with Digital Public Infrastructure
- Real-time retail payment systems successfully accelerate bank account adoption and activation rates demonstrated by India’s JAM trinity experience, with over 80% of accounts now digitally linked.
- Remote rural migrant workers and urban street vendors adopt accessible payment tools quickly through expanding offline merchant acceptance and simple user interfaces like UPI123Pay designed for wider literacy levels.
Alignment with Regional Policy Initiatives
- Launching UPI and RuPay enables de-dollarization sought by Asian Clearing Union central bank governors. This derisks economies from currency fluctuations and global payment network exclusions.
- These commitments showcase India’s proven payment platforms scalably benefitting friendly foreign economies.
- Local deployment empowers ubiquitous mobile and card transactions improvements for common citizens and MSMEs across Sri Lanka and Mauritius.
Domestic Impact Across User Groups
- India’s JAM trinity of payments innovation expanded economic participation with once excluded groups, as street vendors witnessed double incomes after going cashless while women gained financial autonomy.
- UPI eased small business flows, with neighborhood Kirana shops seeing 83% transaction share digitally in 2022 over just 22% in 2014, while micro-merchants prefer UPI 5X over cards.
- Even the largest companies utilize UPI – the Tata conglomerate processes 70% of vendor payments digitally, highlighting efficiencies at enterprise scale.
Future Localized Innovation Potential
- NPCI eyes allowing third-party innovations leveraging features like auto pay for recurring bills under UPI Lite framework to drive small town adoption suits localized needs.
- The Open Credit Enablement Network framework also promises traders and lenders increased access to credit profiles of MSMEs previously missing financial histories.
Global Emerging Market Interests
- Emerging economies from the Philippines to Nigeria study UPI implementation to drive financial inclusion for their unbanked. Privacy first design won UN praise as model for developing nations balancing push towards central bank digital currencies.
- Regional trade blocs including ASEAN and Gulf Cooperation Council recently floated studies on mutual recognition frameworks allowing cross-border mobile payments.
The successes may provide template for further expanding access models with additional developing partners as well, at a strategic inflection point for Asian financial cooperation.