The decision to accept payments in Singapore and other countries such as Bhutan and Nepal is significant not only because of their economic ties to India, but also because UPI is increasingly viewed as a peer-to-peer, global payment network. (It still has a long way to go before it gets there though). Global payment networks can be categorised into three groups. There are Visa and Mastercard, which are accepted globally but are most prevalent in North America and Europe, as well as the China-based closed loop networks Alipay and WeChat Pay. Also UPI.  

“Before the pandemic, we were tasked with evaluating the progress China had made in the payments industry. This is no longer the case, as UPI is now mentioned in its own right, according to HDFC Bank’s country director of payments, Parag Rao.  

Since its introduction in April 2016, UPI has become India’s primary payment method. The Reserve Bank of India’s prediction in its June 2023 bulletin, based on PwC data, that the Unified Payments Interface (UPI) will account for 90 percent of retail digital transaction volume over the next five years, up from 75.6 percent in FY23, is evidence of the system’s dominance.

UPI’s volume increased by 59.2% year-over-year to Rs 9.33 billion in June 2023, while its value increased by 45.5% to Rs 14,75,464 crore. This has only increased to Rs 9.96 billion in terms of volume and Rs 15,33,536.44 crores in terms of value for the month of July.  

In a press conference held on August 10 following the announcement of the monetary policy, the governor of the Reserve Bank of India (RBI), Shaktikanta Das, stated that the internationalisation of the Unified Payments Interface (UPI) is currently under development.  

In India, UPI use cases are expanding. RuPay (an Indian multinational payments system) and UPI have been implemented through payment solutions outside of India. There have been discussions regarding linking domestic credit cards to UPI and enabling credit for Indian consumers via UPI. On the acceptance front, merchants prefer UPI because QR codes are inexpensive to deploy compared to point-of-sale (POS) devices, the costs of which are ultimately passed on to the merchant, and the absence of a merchant discount rate.  

On the international front, however, NPCI International has its work cut out for it. It is working on a long-term strategy to promote the visibility and accessibility of the payment network. It already has numerous advantages. There are developing economies where currency is widely used. In contrast, the deployment of POS devices is costly. India offers a low-cost alternative that is readily scalable. With this objective in mind, NPCI decided to internationalise UPI. 

How UPI’s global transactions work

The NPCI has taken a two-pronged strategy to establishing UPI in other countries. “There are two main objectives when we travel outside of [India]. Ritesh Shukla, CEO of NPCI overseas, explains, “One is building interoperability with India, and that means two things: creating opportunities for travellers from India when they visit international markets, and giving them the option to scan their UPI apps and make UPI payments.”

Helping other countries establish ecosystems analogous to UPI is the second phase (step two), which is more long-term in nature. To this end, we prefer to collaborate with central banks or central bank-authorized businesses, says Shukla, and develop a relevant proposition that incorporates both technological and business expertise.

This is how an international UPI payment operates. In Singapore, there would be an acquiring bank. The money would be transferred through an internal transfer system, such as PayNow. According to HDFC Bank’s Rao, the system would be built to communicate with the Indian system UPI, and from there it would travel over the UPI network to the customer’s Indian bank account. The order of events would be inverted during settlement.

The second application is for the 30 million members of the Indian diaspora living in the Middle East, Southeast Asia, and North America to remit financial support to their home country. This would again take advantage of the local network in that country with which UPI has partnered with the Indian UPI network to remit money cheaply. Foreign workers sent $89 billion to India in 2021-22, representing a sizable economic opportunity.  

Long-term, NPCI International will work to assist other nations in developing UPI-style ecosystems. According to Shukla, “and our model is that we prefer working with central banks or central bank-authorised entities in order to create a relevant proposition that not only has technology but also business know-how.”  

In this respect, UPI has the potential to significantly contribute to the worldwide success of the payments network. Experts in the financial technology industry have speculated that UPI will prove more practical for low-value, low-ticket transactions. “One can look at the scan and pay use cases in SE Asia and Chinese wallet applications like Alipay and WeChat Pay,” says Harish Prasad, head of banking at fintech firm FIS Group. Scan-and-pay has experienced huge success in Singapore. “As long as the transaction is secure and there is recourse in payment, people are used to using scan and pay,” he said.  

Problems with Scaling Up

NPCI International has signed agreements with many countries, including Nepal, Bhutan, Singapore, the United Arab Emirates, France, and Oman, but there is no information available about the volume of transactions that have occurred as a result, such as money being sent back to India or Indians scanning QR codes for local payments while abroad.  

Shukla suggests that once a certain threshold is crossed, the volume of such transactions could explode in a “hockey-stick” fashion. Nonetheless, the unwillingness to disclose such data suggests that UPI usage outside of India still has some distance to travel.    

Prashanth Aditya Susrala went to Dubai for work in the month of July. This occurred not long after the United Arab Emirates (UAE) Instant Payment Platform announced its compatibility with UPIs. The airport he arrived at and the stores he went to gave no indication that such a service existed. Since there is a sizable Indian community in Dubai, he thinks that adoption would have been rapid in light of this information. This is something that NPCI International’s Shukla has acknowledged, and he promises a significant increase in advertising over the coming six months. Previous attempts at implementing UPI by Susrala in Nepal were similarly unsuccessful. “The QR infrastructure outside India is not well developed, and while in India it is interoperable, that is not the scenario in some of the countries outside India,” says Rahul Jain, CFO of NTT Data Payment Services India.

The process of acceptance in India likewise took a while, from 2016 to 2019. The widespread adoption of digital payment methods is unlikely to diminish. There are other indications (see figure) that cash usage in the Indian economy is declining.

According to a report published by PwC in May 2023, the volume of digital payments in India is projected to reach 411 billion by FY27, up from 103 billion in FY23, thanks to the industry’s steady growth over the past five years at a CAGR of 50 percent.

Another problem is that Indians living overseas may favour using UPI for smaller purchases like restaurant meals and tour tickets, but may continue to use credit cards for larger purchases. There is no denying the practicality of using a credit card when making a large purchase, as pointed out by Raj Khosla, the creator of MyMoneyMantra. “This is true even in India as people like to utilise free credit for 45 days,” he says.  

Finally, there’s the problem of the merchant discount percentage. How will foreign businesses that accept credit cards be taxed? NPCI International is upfront about the fact that there will be a price outside of India. The final amount of that fee is still up in the air. It must be low enough that shops discourage people from using credit cards but high enough that banks see a commercial benefit from accepting cash. Pricing and promotion would determine the product’s ultimate success or failure. Both of those plot points are currently developing.

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The UK, which had fallen to sixth due to Brexit, rose to fourth, a position it last reached in 2017.Singapore is a haven for the wealthy, and the recent surge has been fueled by concerns over geopolitical tensions and a crackdown on private enterprise in China. Obtaining the city-state’s travel document, however, is a difficult task. About 23,100 persons were awarded citizenship in the country of 5.6 million in 2017, and authorities ruled out doing so on the basis of individual net worth earlier this year.In order to compile its list, Henley uses information from the International Air Transport Association. This passport index uses a different approach than the one used by the financial advisory firm Arton Capital, which ranked the United Arab Emirates first in the world in 2017.

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Dharmendra Pradhan conferred with Lawrence Wong, the Deputy Prime Minister and Minister of Finance of Singapore, prior to the G20 Summit in India. During their meeting, the two ministers discussed expanding India and Singapore’s existing cooperation, particularly in the area of skill development.

Pleasure meeting DPM & Minister for Finance, Singapore, @LawrenceWongST. Fruitful discussions on strengthening the existing cooperation between 🇮🇳 and 🇸🇬 and deepening engagements in skill development as well as technical and vocational education. pic.twitter.com/1a0VVuoq5C

— Dharmendra Pradhan (मोदी का परिवार) (@dpradhanbjp) May 29, 2023

Pradhan met with the Minister of Trade and Industry of Singapore, Gan Kim Yong. Both parties discussed strengthening bilateral ties for skill development and vocational training.

During his meetings with the Singaporean Minister, India’s Education Minister shared that the Central Government’s NEP 2020 places an emphasis on vocational education, making it one of the partnership’s key focal points.

Pleased to meet @GANKIMYONG, Minister of Trade & Industry, Singapore.

We had fruitful conversations on strengthening our skill development and vocational training linkages through all mechanisms for creating a seamless architecture for skilling and lifelong learning. pic.twitter.com/RxFZmUCk3v

— Dharmendra Pradhan (मोदी का परिवार) (@dpradhanbjp) May 29, 2023

Together, India and Singapore will work to create a workforce that is prepared for the future, which is also an essential aspect of the Education Working Group under India’s G20 presidency.

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According to an official statement released by the Central Government, both Ministers agreed to advance mutual priorities in skilling, create new opportunities for lifelong learning, and collaborate for the benefit of our respective countries and other emergent economies.

Pradhan also visited Spectra Secondary School, where he interacted with students and instructors and learned more about the skills-based education Singaporean schools provide.

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This represents 62 percent of the 4.7 million individuals who visited Singapore in the first three months of 2019.

193,230 of them originated from India, which is approximately three-and-a-half times more than the 54,530 who arrived in 2022. After Indonesians (523,300), Malaysians (278,915), and Australians, Indian residents are the fourth largest source of first-quarter tourist arrivals. (265,730). At 168,960, Americans were the fifth greatest group of visitors by country of origin.

China, which was the largest source of tourists for Singapore in 2019 with over 3.75 million visitors, has not yet returned in full, ranking as the ninth largest group of tourists in Q1 with a total of 124,560 visitors.

According to data from China’s National Bureau of Statistics, nearly 170 million Chinese tourists traveled abroad in 2019.

Although China has suspended travel restrictions, countries such as South Korea and Japan imposed burdensome travel procedures on Chinese citizens earlier this year, dampening the enthusiasm for outbound travel.

This has been made worse by delays in passport renewals and visa applications, as well as Chinese airlines’ inability to operate the same number of flights as before COVID. According to data from the Alibaba-owned travel booking website Fliggy, international flights out of China were less than 10% of 2019 levels in February.

In addition, three years of COVID-19 restrictions have altered the travel preferences of Chinese citizens, with many now content to explore the vast and varied attractions in their own country.

Wolfgang Georg Arlt, founder and chief executive of COTRI (Chinese Outbound Tourism Research Institute), was quoted by CBNC at the world’s largest tourism trade fair, ITB Berlin, as saying, “The Chinese tourists we will welcome this year and in the years to come are very different from those who have come before.” COTRI is a German-based independent consulting firm.

In China, as elsewhere, years of pandemic-induced lockdowns prompted a shift from main tourist attractions to “more nature- and outdoor-oriented tourism,” according to Arlt. He emphasized the emergence of camping and glamping as well as family-oriented vacations.

This year, COTRI predicts that Chinese outbound travel will recover to approximately two-thirds of 2019’s numbers, with approximately 110 million travels abroad.

In the meantime, the Singapore Tourism Board is launching new tourism-boosting activities and attractions without waiting for Chinese tourists to return.

STB and the Infocomm Media Development Authority (IMDA) have announced the establishment of an SGD 10 million (USD 7.5 million) Singapore On-screen Fund to promote tourism to Singapore through television series and films. The purpose of the fund is to assist international media and entertainment (M&E) partners in marketing Singapore through international television and cinema programming.

The Singapore On-screen Fund will support selected projects by leading M&E companies that are situated in Singapore and are released before the first quarter of 2027. Successful projects will receive funding support for up to 30% of qualifying costs associated with featuring Singapore, including production and marketing expenses.

This is in part inspired by past collaborations that produced films like “Crazy Rich Asians,” the popular K-drama “Little Women (2022),” and the HBO sci-fi smash success “Westworld Season 3.” (2020). These performances had an international impact and left a favorable impression on audiences everywhere.

Also just announced in April is the resumption of the Free Singapore Tour, which is extremely popular among Indian and Australian and Indonesian tourists. The tour was halted due to COVID. This tour is organized by STB and Changi Airport for Changi Airport transit passengers with a layover of at least five and a half hours but less than twenty-four hours. Additionally, they must possess legitimate entry visas for Singapore in order to join the tours.

The purpose of these free excursions is to encourage transit passengers to make Singapore their next vacation destination.

The original three excursions, the City Sights Tour, the Heritage Tour, and the Jewel Tour, have been updated to include new points of interest. A brand-new Changi Precinct tour will introduce tourists to the fascinating sights and sounds of the eastern area encircling Changi Airport in Singapore. Each tour will last two and a half hours and will be offered daily, with intentions to offer nine tours per day.

Over 80,000 passengers participated in the Free Singapore Tour in 2019.

The five-year stationing of a brand-new Disney Cruise Line ship in Singapore beginning in 2025 is another thrilling development. On March 29, a memorandum of understanding was announced between STB and Disney Cruise Line.

The 208,000 gross ton ship with a passenger capacity of approximately 6,000 and a crew complement of 2,300 will take passengers on cruises around Southeast Asian countries, which are home to more than 40 UNESCO World Heritage Sites.

During the five-year period, the Disney Cruise Line ship has the potential to attract millions of additional local and international cruise passengers, as well as fly-cruise passengers who arrive in Singapore by air. It is also anticipated to generate significant economic collateral benefits.

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“We are excited to welcome Disney Cruise Line to Singapore in 2025,” stated Keith Tan, CEO of STB. “This is a significant milestone for STB and a testament to Disney Cruise Line’s confidence in Singapore and Southeast Asia. The new Disney cruise ship will be an attraction unto itself and is anticipated to enhance Singapore’s tourism industry for many years.”

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Chintai, a Singapore-based blockchain platform-as-a-service (BPaaS) company, has inked a memorandum of understanding (MoU) with Passion Venture Capital (PVC), a Singapore-based venture capital firm, to establish greater collaboration between traditional finance and security token usage.

The Memorandum of Understanding will serve as the cornerstone for future collaborations as part of the convergence of traditional banking and blockchain technology, the parties stated in a statement on Tuesday.

“We are happy to cooperate with PVC by providing a regulated blockchain platform for digital assets tokenisation and a marketplace. “This enables potential clients to accept digital assets with confidence,” stated Chintai Founder David Packham.

“With an on-chain automatic compliance engine incorporated in our solutions, this is the ideal technology for regulated items like bonds, real estate, or funds,” according to the company.

“The staff at PVC are financial veterans, and their knowledge in capital markets makes them a great partner for us,” he added.

“We have a progressive DNA in our firm,” said PVC Chief Executive Officer Davy J. Goh, “and we are enthused about the potential of digital assets in this region.”

“Our strategy is to work within a regulated environment that gives investors and business partners greater assurance.”

An excellent start to 2023 in Singapore for us. Chintai and Passion Venture Capital sign a Memorandum of Understanding to bridge traditional finance with blockchain technology. #chintainetwork #chintai #digitalassets #regulated #tokenisation
https://t.co/6JyazpDhJ2 pic.twitter.com/sYdIRAvWxr

— Chintai (@ChintaiNetwork) January 10, 2023

“With the CMS and RMO licences, Chintai can assist clients in navigating the complexities of regulated digital assets with a strong corporate governance structure and complete transparency,” he added.

Chintai is a Singapore firm regulated and licenced by the Singapore Monetary Authority. The Chintai platform, which was founded in 2019, uses blockchain technology to modernise capital markets for banks, financial institutions, and asset managers.

The end-to-end solution provides traditional financial organisations with a one-stop platform that includes a sophisticated automated compliance engine powered by our patented Sentinel-AI solution.

Dynamic issuance, automated compliance, reporting, data reconciliation, cap table administration, automated corporate actions, liquidity, fast settlement, and other services are available from Chintai.

The strategic goal is to connect the worlds of traditional finance and blockchain technology to create a new competitive advantage for our clients.

PVC is a pioneer in Asia in assisting innovative fintech start-ups. Davy J. Goh started the firm, which is a Capital Market Services (CMS) certified Fund Manager.

Goh has almost three decades of expertise in the business, banking, and finance industries, servicing both domestic and international clients. PVC was founded as a result of his passion for investing in and expanding fintechs and innovative enterprises.

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