NPCI Seeks For Real-Time Payment Connectivity Between Indian and US Banks

The National Payments Corporation of India (NPCI) and banks in the United States and India are reportedly in advanced talks to establish a real-time payment linkage between the two countries. 

The initiative aims to expand on the progress made by the domestic payments body in establishing cross-country systems, as per ET’s report.

Within the unified payments interface (UPI) ecosystem, the NPCI is collaborating with Indian banks and foreign banks, to create use-case models and conduct testing pilots.

“NPCI is working along with Indian banks and foreign banks to see how they can partner. In addition to talking directly to FedNow or their UPI equivalent on how to connect, they also need the large US banks to partner so that the use-case, testing, etc happens. The process is in advanced stages,” a person familiar with the matter told ET.

FedNow, a real-time payment service by the US Federal Reserve, was launched in July 2023.  

Speaking with ET, another spokesperson said, the current focus is on building connectivity to make any proposed collaboration commercially viable. Given that the US lacks a nationwide system akin to NPCI’s UPI in India, the model would initially focus on small consumer payments.

The first person cited to ET, that due to its real-time nature, the system won’t be extensive in terms of quantity or value, and there would be limitations with a gradual start, focusing on small payments. As of now, the US does not have a successful UPI equivalent. They have a Paytm equivalent wallet kind of thing, FedNow etc, which people use. 

For US banks, especially those with a significant share of US-based consumer wallets, the aim is to collaborate with the proposed model from NPCI and American authorities to leverage existing capabilities.

Moreover, major banks in India and the US need to get involved to serve the large market for consumer payment flows between the two nations.

This comes at a time when the Indian government is actively working on initiatives for cross-border real-time money transfers through UPI. NIPL (NPCI International Payments Limited), a part of the National Payments Corporation of India (NPCI), is expanding the acceptance of BHIM UPI QR codes in stores across various countries. 

These partnerships enable Indian travellers to use BHIM UPI for purchases abroad, with QR codes now functional in Singapore, UAE, Mauritius, Nepal, and Bhutan. A collaboration between India and Singapore has linked their fast payment systems, UPI and PayNow, facilitating quick and secure cross-border money transfers for residents of both nations. 

This aligns with the G20’s goal of improving cross-border payments in terms of speed, affordability, and transparency. These cross-border transaction initiatives are driving a shift in international payments, offering new possibilities and challenges for individuals and businesses.

In September 2023, NPCI was looking to launch the Bharat Bill Payment System (BBPS) for Non-Resident Indians (NRIs) in the UK.