The National Payments Corporation of India (NPCI) is in advanced discussions with Indian and US banks to establish a real-time payment link between the two countries, according to a report by the Hindustan Times. This initiative by NPCI aims to leverage its expertise in cross-border payments.

NPCI's Expertise in Cross-Border Payments

As an umbrella organization for operating retail payments and settlement systems in India, NPCI has built a robust payment and settlement infrastructure in the country. Now, it plans to extend its expertise to enable real-time transactions between India and the United States.

Collaboration with Indian and US Banks

NPCI is collaborating with Indian banks experienced in Unified Payments Interface (UPI) and foreign banks to develop models and conduct pilot tests. By engaging with the US Federal Reserve's real-time payment service, FedNow, or its UPI equivalent, NPCI aims to establish a seamless payment link that offers convenience and efficiency.

Focus on Small Consumer Transactions

The proposed payment model between India and the United States will initially focus on small consumer transactions. This is due to the absence of a nationwide system similar to UPI in the US. As the model is real-time, the transactions will be limited in scale and value. Initially, only modest payments will be allowed.

Restrictions on Foreign Banks

Under the proposed model, individuals who want to send or receive money from a relative using this payment link cannot do so through a foreign bank that is not a consumer bank in India. Instead, they would have to use a large Indian bank. In contrast, in the United States, a person can use an American bank to send or receive money from India.

Revolutionizing Cross-Border Payments

The establishment of a real-time payment link between India and the United States has the potential to revolutionize cross-border transactions. By leveraging NPCI's expertise and collaborating with banks on both sides, this initiative aims to provide a seamless and efficient payment experience for individuals and businesses in both countries.

Benefits for Individuals and Businesses

Once implemented, the real-time payment link will offer numerous benefits. Individuals will be able to transfer money to their relatives in the United States quickly and conveniently. Businesses can leverage the link to facilitate faster cross-border transactions, enabling smoother international trade and commerce.

Enhancing Global Financial Integration

The establishment of a real-time payment link between India and the United States will also enhance global financial integration. It will strengthen economic ties between the two countries and promote international cooperation in the financial sector. This move aligns with the growing trend of digital transformation in the banking and payment industry.

By leveraging its expertise and collaborating with banks, NPCI aims to revolutionize the way individuals and businesses conduct cross-border payments. This initiative has the potential to enhance financial integration and promote economic cooperation between India and the United States, bringing convenience and efficiency to international transactions.