On June 6, 2026, India and Nepal launched a peer-to-peer (P2P) cross-border remittance system, integrating India’s Unified Payments Interface (UPI) with Nepal’s National Payments Interface (NPI). This initiative enables instant, real-time fund transfers, bolstering digital connectivity and financial inclusion between the two nations.
Key Mechanics and Implementing Agencies
- Agencies: The project was executed by NPCI International Payments Limited (NIPL) and Nepal Clearing House Limited (NCHL).
- Infrastructure: The integration utilizes API-based connectivity, allowing users to conduct transactions via Virtual Payment Address (VPA), mobile numbers, or QR codes.
- Efficiency: The system significantly reduces transaction costs (from 5-7% via traditional channels to a minimal flat fee) and settles transfers in under 60 seconds.
- Formalization: It promotes the formalization of migrant remittances, diverting funds from informal routes like the Hundi system into secure banking channels.
- Border Economy: The system supports “de-cashing” in border areas, simplifying transactions for tourists, pilgrims, and small-scale merchants.
IASPOINT Booster Facts
- Regulatory Framework: Retail payments in India are governed by the Payment and Settlement Systems Act, 2007, under the oversight of the Reserve Bank of India (RBI).
- Digital Diplomacy: India’s Digital Public Infrastructure (DPI)—including the India Stack—is being positioned as a global template for financial inclusion in the Global South.
- Global Reach: UPI is currently active in multiple jurisdictions, including Singapore (PayNow), UAE (AANI), Bhutan, Mauritius, Sri Lanka, and France (Lyra Network).
- Legacy Scheme: This mobile P2P linkage operates independently of the existing RBI Indo-Nepal Remittance Scheme, which allows up to ₹2 lakh per transaction via NEFT.
- Economic Context: Cross-border digital payments facilitate GATS Mode 1 (cross-border supply) services by streamlining settlement for digital commerce.