The National Payments Corporation of India (NPCI) is an ‘advanced’ discussions with Indian and US banks to establish a real-time payment link between the two countries, Economic Times has reported (story behind paywall).
The initiative aims to leverage NPCI’s expertise in cross-border payments, the report added.
“NPCI is collaborating with Indian banks experienced in Unified Payments Interface (UPI), and foreign banks to develop models and conduct pilot tests,” a person aware of the development told ET.
NPCI engaging with FedNow
According to the report, NPCI, which is backed by the Reserve Bank of India (RBI) and operates retail payments and settlement systems in the country, is engaging with FedNow or its UPI equivalent.
Launched by the US Federal Reserve in July last year, FedNow is a real-time payment service.
Model to focus on small consumer transactions
Additionally, as per the report, this proposed payment model between India and the United States would initially focus on small consumer transactions, this due to the absence in the US of a nationwide system akin to UPI in India.
Further as the model is real-time, the transactions would be limited in scale and value, and initially, only ‘modest’ payments will be allowed.
“If you want to send money or receive payment from a relative under the model you cannot do it through a foreign bank that is not a consumer bank in India. It would have to be done through a large India bank. In the United States, a person can use an American bank to send or receive money from there,” another person that the publication spoke to, said.
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