Abu Dhabi [UAE]: India's National Payments Corporation of India (NPCI) signed an agreement with UAE's Al Etihad Payments to provide real-time and cost-effective cross-border remittances.
This MoU will facilitate the users of both the countries which would be as seamless as a domestic transaction using a beneficiary identifier (mobile number/VPA).
The agreement also aims to enhance the transparency for the users through upfront display of remittance amount in both the currencies with applicable charges.
Among the salient feature of the agreement is integrating Unified Payments Interface (UPI) of India and Instant Payments Platform (IPP) of the UAE, to process cross-border transactions between the two countries more efficiently.
Another feature would be Interlinking card switches of the two countries - RuPay switch and UAESWITCH to facilitate the mutual acceptance of their domestic cards and processing of card transactions directly without relying on any other network
The linkage of card switches shall enable the card holders to use their domestic cards (without a need to have global cards issued) in each other's jurisdiction on a reciprocal basis on ATMs, PoS terminals and for e-com transactions, as per the agreement
It further adds, the linkage of messaging platforms shall reduce dependency on multilateral systems like SWIFT. This shall not only be cost-effective but would also provide a comfort to both the countries in view of present geo-political situation.
The agreement was signed on Thursday in the presence of Commerce and Industry Minister Piyush Goyal.
Reserve Bank of India (RBI) along with NPCI International Payments Limited (NIPL) have been engaging with the Central Bank of the UAE (CBUAE) for linking of fast payment systems (FPS) and bilateral acceptance of domestic cards between India and the UAE.
Following several rounds of discussions in this regard, including a meeting between RBI Governor, Shaktikanta Das and Governor of CBUAE Khaled Mohammed Salem Balama Al Tameemi in January this year, CBUAE shared a draft for collaboration on linkages of fast payment systems, cards, and messaging systems.
There are approximately 3.5 million Indian expatriates living in the UAE, remitting a total of USD 20 billion annually to India. Nearly, 2.3 million Indian expatriates work in blue collar jobs.
This demographic in the UAE is underbanked and financially excluded from mainstream banking. This creates a unique corridor of opportunity between India and the UAE for various digital solutions in the area of digital payments connecting Indian diaspora in the UAE, as well as their families in India.