India has recently expanded its national payment network to Singapore, raising the question of what this could mean for the cryptocurrency industry.
One of the banking partners involved in the cross-border remittance service is also a participant in the government's Central Bank Digital Currency (CBDC) program. This collaboration between the banking sector and the government is a major step forward in the development of digital currency and its potential to revolutionize the global financial system.
India's national payment network, Unified Payments Interface (UPI), is expanding its services beyond Indian borders to Singapore. Shri Shaktikanta Das, Governor of the Reserve Bank, and Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, recently launched the cross-border connectivity between Singapore and India via their respective rapid payment systems, PayNow and UPI. Through token transactions, users of the two nations can now send money across borders quickly and securely.
The UPI-PayNow integration allows users to send or receive money from India using only a UPI-id, cellphone number, or Virtual Payment Address for money held in bank accounts or e-wallets (VPA). UPI's instant real-time payment system facilitates the transfer of funds immediately via a mobile interface between the two bank accounts, making it easier than ever to send money across borders.
At the outset, four major banks in India - State Bank of India, Indian Overseas Bank, Indian Bank, and ICICI Bank - are facilitating outgoing remittances, while Axis Bank and DBS India are facilitating incoming remittances. To provide the service to users in Singapore, DBS-Singapore and Liquid Group, a non-bank financial institution, have been roped in.
ICICI Bank, a private sector bank in India, is also part of the country's ambitious central bank digital currency (CBDC) program. India launched its CBDC pilot in two phases, with the first phase commencing in November for the wholesale market and the second phase beginning in December for retail users.
Since the trials began on December 1st, 2022, the digital rupee pilot project has seen a remarkable 770,000 transactions involving eight banks. Currently, five cities are participating in the experiment, with nine more cities likely to join the trial soon.
Sathvik Vishwanath, CEO of Indian crypto exchange Unocoin, recently told in reports that:
“The integration of their platform into Singapore's payment rails is a major value addition for India. With close to 30% of Singapore's population being ex-pats, this integration eliminates friction and reduces processing time and costs for those sending money to India on a monthly or quarterly basis.”
The Indian government has been sceptical of the larger crypto market, imposing a 30% tax on crypto gains, which has caused major players to move out of the country. Despite this, the government is still keen on using blockchain technology for its CBDC program, and the existing digital payment infrastructure could help in scaling its CBDC pilot.
The popularity of digital payments has skyrocketed in India over the past few years, particularly due to the onset of the Covid-19 pandemic.
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