In a landmark development aimed at revolutionizing cross-border remittances, India’s National Payments Corporation of India (NPCI) and the UAE’s Al Etihad Payments have inked a Memorandum of Understanding (MoU). This strategic partnership is set to make remittances between the two nations as smooth and cost-effective as domestic transactions, ushering in a new era of financial connectivity.
The crux of this groundbreaking agreement is the introduction of a beneficiary identifier, be it a mobile number or Virtual Payment Address (VPA), for users in both countries. This move will drastically simplify the remittance process, enabling individuals to send and receive funds with unprecedented ease.
One of the standout features of the agreement is the integration of India’s Unified Payments Interface (UPI) and the UAE’s Instant Payments Platform (IPP). This integration is set to streamline cross-border transactions between India and the UAE, making them more efficient and accessible to users on both ends.
Another significant aspect of this partnership is the interlinking of card switches – the RuPay switch in India and UAESWITCH in the UAE. This innovation will allow users to utilize their domestic cards for ATM withdrawals, Point of Sale (PoS) transactions, and e-commerce purchases in each other’s jurisdiction, eliminating the need for global cards.
Furthermore, the agreement emphasizes the importance of reducing dependency on multilateral systems like SWIFT for messaging. By creating a direct linkage between messaging platforms, both nations seek to enhance their financial security and independence, particularly in light of the current geopolitical landscape.
The MoU, signed in the presence of India’s Commerce and Industry Minister, Piyush Goyal, represents the culmination of extensive negotiations between the Reserve Bank of India (RBI), NPCI International Payments Limited (NIPL), and the Central Bank of the UAE (CBUAE). This collaboration envisions the linking of fast payment systems (FPS), bilateral acceptance of domestic cards, and messaging systems, creating an ecosystem that fosters seamless financial transactions between India and the UAE.
This partnership is poised to bring immense benefits to the approximately 3.5 million Indian expatriates living in the UAE, who collectively remit a substantial $20 billion annually to India. A substantial portion of these expatriates work in blue-collar jobs and are often financially underserved. This unique opportunity will help bridge the financial gap for this demographic, connecting them with digital payment solutions and providing easier access to financial services.