Indians living in the UAE, Saudi Arabia, Qatar and Oman, and six other countries, will soon be able to make payments in Unified Payments Interface (UPI) through NRE accounts in India or abroad, without having to get an Indian mobile number.
The National Payments Corporation of India (NPCI) has now allowed Non-Resident Indians (NRIs) in 10 countries to digitally transfer funds using the UPI platform from their non-residential (NRE/NRO) accounts. The move could lead to a major impact on companies like MasterCard and Visa and also money exchanges, as the Government of India-backed UPI payments are much cheaper than all its competitors.
An NRE account helps NRIs transfer money in foreign currency to India, while an NRO account helps them manage the income earned in India.
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NRIs will now be able to use their accounts linked to their international SIM and use it like any other Indian UPI user for merchant payment as well as peer-to-peer payments. This is going to help them make the smallest of payments, especially when they are traveling to India, without absorbing the steep charges of other credit cards.
UPI is an instant real-time payment system. The transaction is done through a mobile phone in easy steps. Besides, there are no charges applicable for UPI transactions. The inexpensive medium for cashless transactions now has 381 banks associated with it and a major form of payment in the country.
Apart from the four Gulf countries, Indians living in the USA, the UK, Singapore, Australia, Canada and Hong Kong will be able to use the service.
The NPCI has acted on the many requests it has received to allow NRIs to use international mobile numbers for transacting in UPI. It has now given partner banks a deadline of 30 April to comply with the directions.
In a circular issued on Wednesday, the NPCI informed the participating UPI members about its decision and said: “Crediting/debiting non-resident (NR) accounts in UPI and IMPS domestic transaction will be allowed as per the FEMA regulation and adherence to the guidelines/instruction issued by concerned regulatory departments of RBI (Reserve Bank of India).”
Explaining its decision, the NPCI added: “We have been receiving requirements from the ecosystem with regards to the non-resident (NR) accounts and other permissible accounts having international numbers to be allowed to transact in UPI. And there has been customer demand in the ecosystem to enable UPS for their NR accounts having international numbers and experience the seamless and instant journey of UPI.”
A recent story in Outlook India explained that UPI transactions are considered a public good by the Ministry of Finance, with not much scope for monetising them. At present, the payments industry does not earn any merchant discount rate (MDR) or interchange fee (transaction fees levied by intermediaries in payment systems) on these UPI transactions backed by debit card.
However, the integration of RuPay credit cards (an NCPI-backed card-payment system just like MasterCard and Visa) with UPI has a provision that transactions above INR2000 ($24.5/AED90) will attract MDR, as is applicable to regular credit card transactions.
Mastercard and Visa are global leaders in the credit card market, but they have taken a hit with the establishment of the NPCI, which is a not-for-profit company is aimed at establishing an efficient homegrown payment infrastructure in India which is independent of foreign players.
The facility may be extended to NRIs living in other countries in the future.
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