1 day Ago By Rohit Singh
The Indian government has asked the Financial Action Task Force (FATF), an international body that monitors money laundering, to ease compliance rules for cross-border payments made through the Unified Payments Interface (UPI).India’s Request to FATFAt a recent FATF conference in Mumbai, Indian officials raised concerns that strict compliance rules hinder smaller players from expanding UPI internationally. According to a Reuters report, the government pointed out that global networks like SWIFT, Visa, and Mastercard do not face similar restrictions.
FATF’s “travel rule” requires financial institutions to collect and share details of both the sender and receiver in cross-border transactions. India has requested that these regulations be revised to ensure a level playing field. Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that it would be “desirable to make FATF’s travel rule technology-neutral,” without directly mentioning UPI.
Expanding UPI InternationallyUPI is currently accepted at select merchant outlets in seven countries: Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka, and the UAE. To expand its global reach and compete with international payment giants, NPCI International Payments Limited (NIPL), a subsidiary of the National Payments Corporation of India (NPCI), has signed agreements with these countries to enable UPI transactions.Additionally, India is collaborating with central banks in Malaysia, the Philippines, Singapore, and Thailand under Project Nexus to link UPI with their fast payment systems.
The Indian ambassador to Qatar recently announced that UPI will soon be available there.NPCI has also enabled Non-Resident Indians (NRIs) to use UPI with international mobile numbers linked to their Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts. This feature allows NRIs in 12 countries, including the US, UK, UAE, and Singapore, to transact using select banking apps.
The RBI expects remittances to India to rise from $115 billion in 2023 to $160 billion by 2029. Expanding UPI access for NRIs could enhance remittance efficiency, reduce transaction costs, and strengthen India’s fintech ecosystem.Challenges and Global CompetitionUPI has grown rapidly, accounting for 83% of India’s digital payments in 2024, up from 34% in 2019.
However, its expansion into international markets is facing hurdles due to FATF’s anti-money laundering regulations.The push for relaxed compliance is likely to bring UPI into direct competition with Visa and Mastercard. These companies have previously raised concerns about India’s policies promoting homegrown financial services.
In 2021, Visa complained to the US government that India’s promotion of RuPay, a domestic card network, was unfair. Similarly, in 2018, Mastercard accused the Indian government of using nationalism to promote RuPay over foreign competitors.Why It MattersThe outcome of this debate will have significant consequences for India’s digital economy.
If FATF agrees to ease compliance, UPI could emerge as a strong competitor in the global payments market, reducing dependence on international payment networks like Visa, Mastercard, and SWIFT. This would enhance financial sovereignty and make digital transactions more accessible for Indians abroad.On the other hand, if FATF maintains strict compliance, India may struggle to scale UPI globally, limiting its ability to challenge established payment giants.
Moreover, concerns about financial security and anti-money laundering safeguards will continue to be debated.What’s Next?FATF is currently holding a public consultation on the travel rule, with feedback open until April 18. A final decision will depend on whether FATF member countries find India’s request justified.
While India aims to expand UPI’s global footprint, concerns remain over compliance with international anti-money laundering safeguards. The debate will test whether UPI can align with global financial regulations while competing with established payment networks. The outcome could shape the future of cross-border digital transactions.
Also Read:Which countries will soon accept UPI payments and RuPay cards? Here’s the complete list (Update: Mauritius)UPI Crash Leaves Users Stranded: Is NPCI’s Monopoly a Weak Link?Union Cabinet Approves Rs 1,500 Crore Outlay For UPI Transactions: What It MeansThe post India Pushes To Overcome FATF’s Cross-Border Payment Barrier for UPI Expansion appeared first on MEDIANAMA..
