Globalization of India’s UPI is Blow to Western Payment Systems: Expert
PM Narendra Modi announced during an address to the Indian community in Paris that India and France have agreed to the usage of Unified Payments’ Interface (UPI) in Paris. The upcoming launch of India’s domestic digital payments’ platform Unified Payments Interface (UPI) in France as part of its ongoing “globalization” process will deliver a further blow to western payment mechanisms such as Mastercard and Visa, an Indian advocacy group has told Sputnik.
“The announcement by PM Narendra Modi on the upcoming launch of UPI in France represents a step forward for making it a global payments system. It will definitely reduce the importance of western giants such as Mastercard and Visa,” stated Ashwani Mahajan, the co-convenor of Swadeshi Jagran Manch (SJM).
Mahajan remarked that the UPI’s upcoming launch in Paris was “just the beginning” in the journey of “making the Indian Rupee (INR) a global currency”.
The UPI is an instant digital payment system allowing transfer between different banks. It is based on the Indian rupee. The UPI was launched in 2016 by National Payments Corporation of India (NPCI), a government-backed agency.
Mahajan noted that many countries have already evinced “interest” in joining the UPI ecosystem. The Indian government told the country’s Parliament in March this year that Singapore, the United Arab Emirates (UAE), Mauritius, Nepal and Bhutan had already accepted the UPI mechanism. India’s Communications, Electronics and IT Minister Ashwini Vaishnaw told the World Economic Forum (WEF) in Davos this year that India witnessed more digital transactions in 2022 than sum total of US, UK, Germany and France. According to NPCI data cited in Indian media, nearly 74 billion transactions valued at $1.5 trillion were carried out using UPI in India in 2022.
Mahajan said that, as compared to European nations, New Delhi was already “ahead of the curve” in adopting the digital payments platforms. Mahajan underlined that the push to globalize the UPI had gained momentum owing to the “disruptions” caused by sweeping economic sanctions against Russia by the G-7 club of rich countries since last year.
“Such geopolitical disruptions always lead to changes,” he remarked. Last March, the European Union (EU) banned major Russian banks from using the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system.
The move caused significant disruptions in countries such as India, where banks have traditionally relied on the SWIFT to carry out trade with Russia. As a means to bypass the western restrictions, the Reserve Bank of India (RBI) last July allowed foreign banks to open ‘Vostro’ accounts in Indian banks to settle payments in INR. New Delhi has said that it has agreed on trading in national currencies with close to 18 countries. India’s new Foreign Trade Policy (FTP) released this year said that New Delhi would “encourage” the use of rupee in international trade settlements to “disaster-proof” the domestic economy from global economic contingencies.