Exploration of Cross-border Financial Transactions in India: Examination of the Initial 18 Months' Statistics
The Reserve Bank of India (RBI) has been releasing data on India's cross-border payments for the past 18 months, offering an unprecedented view into the country's cross-border transactions by payment instrument.
A key trend emerging from this data is the rapid growth of digital and instant payment systems for cross-border transactions. The Unified Payments Interface (UPI), launched in 2016, is at the heart of this trend. UPI is linked with fast-payment systems of multiple countries, including Singapore’s PayNow, UAE, Nepal, Bhutan, Mauritius, France, and Sri Lanka, enabling real-time and cost-efficient cross-border payments.
Digital wallets and mobile apps integrated with UPI, such as Google Pay, PhonePe, and BHIM, have significantly increased the usability for cross-border remittances, including person-to-person and merchant payments. The expansion of the UPI-PayNow corridor to include more Indian banks facilitates seamless transfers between India and Singapore.
Credit and debit cards continue to grow domestically and internationally, supported by increasing adoption. However, digital wallets and UPI corridors are becoming the leading instruments for cross-border transactions. While the RBI has not provided specific data on the card share in cross-border volumes, the Indian card payments market is forecast to grow strongly, indicating a rising usage for cross-border payments.
Prepaid payment instruments (PPIs) and stored-value cards are seen as important in offline and limited connectivity environments globally. The RBI has piloted innovations along these lines, but there is no detailed division of their share in cross-border transactions explicitly from the RBI dataset.
The overall digital payment infrastructure in India has expanded rapidly. The RBI’s Digital Payments Index more than quadrupled since 2018, reflecting broad growth in digital payment instruments, increased merchant acceptance, and technological penetration.
In summary, the RBI data and related initiatives indicate a strong shift towards digital wallets linked with UPI for cross-border payments. Credit and debit cards maintain significant importance, but digital wallets and UPI corridors are becoming the leading instruments for cross-border transactions. Prepaid instruments also form part of the broader payment ecosystem, especially where offline or limited connectivity considerations apply.
The UPI is supported by a wide range of cards and digital wallets, and as of now, the number of countries supporting UPI in some form is in double digits. However, the dataset does not provide specific data on the overall volume or number of cross-border flows from India over time.
[1] Source: Reserve Bank of India (RBI) [2] Source: Indian Card Payments Market Forecast, 2022-2027 by ResearchAndMarkets.com [3] Source: RBI's Press Release on UPI-PayNow Corridor, 2021 [4] Source: RBI's Innovations in Prepaid Payment Instruments, 2020 [5] Source: RBI's Annual Report 2021-2022
Businesses in India are leveraging technology to drive growth in finance, as seen in the rapid expansion of the digital payment infrastructure. The Unified Payments Interface (UPI), a indigenous initiative, is leading this change, particularly in cross-border transactions. UPI, backed by a wide range of digital wallets and cards, has established links with several foreign countries, enabling cost-efficient and real-time cross-border payments. This technology-driven shift in finance, as suggested by the Reserve Bank of India's data, is set to continue, making digital wallets and UPI corridors the preferred instruments for cross-border transactions. [1, 3]
