The prime minister would reach Singapore on Thursday for a three-day trip on the second leg of his two-nation tour. He arrives in Indonesia on May 29.
A memorandum of understanding (MoU) signed between Nets, floated by a consortium of Singapore-based banks but as privately-held company and state-owned NPCI is already in existence since September last year. Modi’s visit is expected to be the trigger to make the connection become practical.
While upper-middle class Indians use credit, debit or forex cards when they step abroad, New Delhi hopes the linking RuPay debit cards promoted by NPCI will deepen the digital payments ecosystem among an entirely new generation of users in India.
Neither Nets nor NPCI was willing to comment on the possibility of the formal launch of the digital ecosystem to time with Modi’s halt at Singapore. Government officials in both countries said the handshake was expected to be one of the marquee moments of this visit. It would be gradual, though. One of the possible hindrances is the almost mandatory use of Aadhaar as know your customer identifier by NPCI for its domestic platforms. Allowing, say Singapore customers on these platforms would mean relaxing this constraint that has been hardwired into the banking payments system by RBI. This is yet to be decided upon.
A press release issued when the two organisation signed on the MoU sets “mid 2018” as the time to roll out the first phase of the partnership. It would enable an Nets powered digital cards system to become operational so that it can be accepted as a payment option on NPCI’s e-commerce merchants’ websites in India. Similarly “RuPay cards (will) be accepted via QR code payment at all NETS acceptance points in Singapore”.
Mutually acceptable e-wallets on cards
One of the announcements during Modi's Singapore visit could be the launch of mutually acceptable digital wallets between the two nations
Once the handshake between NPCI and Singapore’s Nets happens, Indians with RuPay card can do any transaction in Singapore
Transactions would be hosted by NPCI
While upper-middle class Indians use credit, debit cards when they step abroad, New Delhi hopes the linking of RuPay debit cards will deepen digital payments’ ecosystem
Using RuPay like Visa or MasterCard to swipe at any point of sale in Singapore would have to wait a bit more. Other than Aadhaar another constraints is that Indian rupee is not a freely convertible currency. This limits the payment options that can be made available to offshore merchant entities. It would depend on the two way availability of a rupee to Singapore dollar quote on a real time basis. The Reserve Bank of India would have to make adjustments to its management of the Indian Rupee to make this happen.
For Singapore too the payment gateway is important This project was facilitated by International Enterprise (IE) Singapore, which saw the market need and complementary solution NETS could provide for the collaboration with NPCI. With India’s rising consumer growth and digital adoption, this cross-border digital payment gateway allows Singapore companies to tap into opportunities from Indian consumers.
For India, an acceptance of RuPay card by Singapore is a major stepping stone to the wider acceptance of the Rupee abroad. In the welter of competing digital payments practices sweeping through Asia, making RuPay an important player, is important. China is attempting s similar deal for the Yuan abroad and has the chance to do so on the back of the mega Chinese e-commerce companies.
This is one of the reasons why the Prime Minister’s Office is working on ways to make the next stage of announcement possible, despite the constraints yet to be cleared.
NPCI is in the midst of aligning the payment practices within India too to make digital payment platforms competitive for domestic trade too. While volumes have risen exponentially—the volume of transactions on the mobile based digital payment ecosystem has crossed the one billion mark by April 2018 in just two years of its launch, the expansion of the system to beyond the borders of India to a huge market like Singapore could be a massive stamp of acceptance for the eco-system.