Indian Prime Minister Narendra Modi and his Singaporean counterpart Lee Hsein saw the release of the linkage between Unified Payments Interface (UPI) of India and PayNow of Singapore. Integrating both nations’ financial systems would allow citizens to transfer cross-border payments more quickly and cheaply. It will facilitate the immediate and low-cost transfer of funds from Singapore to India and vice versa.
This is done under India’s CBDC (central bank digital currency) program. The program takes inspiration from blockchains and cryptocurrencies but shall work under a central authority, a central bank. It can work under the blockchain method that is used in the trading of cryptocurrencies.
The program is launched under two phases, first in December 2022 for the wholesale market and for the retail market in December has seen a lot of traction involving almost 770,000 transactions. The major hike in digital transactions was seen right at the emergence of Covid 19 pandemic.
Despite integrating blockchain methods in their CBDC program, the Government is still sceptical about crypto laying a 30% tax rule in the 2022 Finance Bill. Apart from that, traders, like betting tax rules, cannot set off losses against profits. and each trading set will be assessed independently for tax purposes. This led to a drop in crypto trading volumes by almost 90% all across the market. Although crypto exchanges were not directly employing UPI, they had previously worked with many payment processors that have UPI access to allow fiat to crypto onboarding.
CEO of the Indian crypto exchange, Sathwik Vishwanath weighed his opinions on the matter. He claimed that since close to 30% of Singaporeans are ex-pats who transfer money to India at least once a month or quarterly, this is a huge value addition for India’s payment rails. Its integration reduces friction, lowering processing time and expenses.