India’s UPI offers a highly successful template that can be adapted to different markets and needs
India’s Unified Payments Interface (UPI), initially launched in 2016, has rapidly evolved into one of the most successful digital payment systems globally. As the world increasingly embraces digital payments, India is extending its UPI system to various countries, with significant progress being made across multiple continents. The latest development in this initiative is a partnership between NPCI International Payments Limited (NIPL) and Trinidad and Tobago, to develop a real-time payments platform similar to UPI. 

This collaboration marks a milestone, making Trinidad and Tobago the first Caribbean nation to adopt the globally renowned UPI. The move is part of India's broader goal of exporting its innovative financial solutions to emerging markets.

India’s National Payments Corporation of India (NPCI), which operates UPI domestically, has carved out an international arm—NIPL—to spearhead the global expansion of UPI. NIPL's primary goal is to help other countries build their own digital payments ecosystems using UPI as a model.

Recently, NIPL signed a deal with the Ministry of Digital Transformation in Trinidad and Tobago to develop a comprehensive digital payments system. This system will facilitate both person-to-person and person-to-merchant transactions, making financial transactions more seamless and secure for residents. The agreement, announced on September 27, 2024, highlights India's ambition to become a key player in the global digital payments sector.

Earlier this year, NIPL also entered into similar agreements with Peru and Namibia, marking its first steps into the Latin American and African continents. These countries aim to use UPI as a blueprint for developing their own payment platforms, leveraging the infrastructure and experience NPCI has built in India. With these partnerships, India is not just exporting its technology but also fostering financial inclusion in developing economies.

The UPI system’s international appeal lies in its simplicity, security, and scalability. The platform allows users to make real-time payments via mobile devices, reducing dependency on cash and enabling financial inclusion. By linking bank accounts directly to mobile payment systems, UPI eliminates intermediaries, ensuring low transaction costs and high efficiency.

India has already extended UPI’s capabilities to several other countries. As of 2024, UPI can be used in Sri Lanka, Mauritius, France, UAE, Singapore, Bhutan, and Nepal, with more countries in discussions for similar adoption. In France, UPI debuted in Paris at the iconic Eiffel Tower, allowing tourists to make payments through India’s digital platform. 

India's UPI is increasingly gaining traction in the United Arab Emirates (UAE) and Singapore. In 2021, NPCI partnered with Mashreq, a leading UAE financial institution, to enable UPI acceptance across merchant outlets. This partnership has facilitated the use of UPI by Indian travelers in the UAE, a significant remittance corridor for India. Singapore, another major hub for Indian expatriates, also adopted UPI, allowing seamless cross-border payments and transfers.

These international collaborations offer immense benefits, not only making it easier for Indian citizens abroad to make payments but also enhancing remittances. The UAE and Singapore alone account for a significant portion of the $125 billion remitted to India annually. UPI’s integration into these countries’ payment systems helps streamline these transactions, reducing fees and improving efficiency.

As digital payment systems continue to proliferate, countries are looking for secure and cost-effective models to implement. India’s UPI offers a highly successful template that can be adapted to different markets and needs. The Bhutan model, for instance, was an early adopter of UPI, and Nepal followed suit by becoming the first country to deploy UPI as a full-fledged payment platform outside India in 2022.

These collaborations are part of a larger effort to integrate UPI into cross-border payment systems. NPCI has ambitious plans to expand UPI's presence to Japan, Australia, Saudi Arabia, the United Kingdom, and several African countries. By doing so, India hopes to offer a viable alternative to more established digital payment systems, such as China’s Alipay and WeChat Pay, which currently dominate many markets.

While UPI’s global reach is steadily growing, challenges remain. One significant hurdle is merchant acceptance, particularly in countries like the UAE, where UPI’s visibility is still limited. NPCI plans to double UPI access points in regions like the UAE and Singapore over the next year, but increasing merchant participation remains crucial.

Another challenge lies in reducing the costs of cross-border transactions. Traditionally, remittances incur high fees, ranging from 4% to 5%, due to multiple intermediaries. UPI’s leaner model could potentially reduce these fees by a quarter, making international payments more affordable. However, resolving currency conversion and cross-border dispute settlement mechanisms are additional hurdles UPI will need to overcome to achieve full-scale global adoption.

India’s export of UPI is more than just a technological initiative; it’s a strategic move in soft power diplomacy. As UPI expands, it strengthens India’s economic ties with partner countries, particularly those in South Asia, Africa, and Latin America, where financial inclusion remains a significant issue. The scalability and efficiency of UPI position India as a leader in digital finance, offering a viable, cost-effective solution for both domestic and international markets.

In the long term, India’s success with UPI could pave the way for the export of other elements of its Digital Public Infrastructure (DPI), further boosting the country’s influence in global financial and technological sectors.
As NPCI continues to build partnerships around the world, UPI is well on its way to becoming a global payments powerhouse.