The National Payments Corporation of India (NPCI) appears to be in the ‘advanced’ stage of discussions with Indian and US banks as they are planning to establish a real-time payment link between the two countries, as per the media report.
NPCI Engaging With FedNow In Order To Establish Real-time Payment Link
When it comes to NPCI, it is an organization that operates retail payments and settlement systems in India.
Basically, it was incorporated in 2008 as an umbrella organization for operating retail payments and settlement systems in India.
NPCI has created a robust payment and settlement infrastructure in India.
This latest initiative by NPCI will help in leveraging its expertise in cross-border payments, as per the report.
According to the sources close to this development, “NPCI is collaborating with Indian banks experienced in Unified Payments Interface (UPI), and foreign banks to develop models and conduct pilot tests.”
As we know that NPCI is backed by the Reserve Bank of India (RBI) and operates retail payments and settlement systems in the country, now further plans to engage with FedNow or its UPI equivalent.
For the unawares, FedNow is a real-time payment service which was Launched by the US Federal Reserve in July last year.
Focusing On Small Consumer Transactions
This proposed payment model between India and the United States would initially focus on small consumer transactions, the report said.
This is suggested due to the fact that there is an absence in the US of a nationwide system akin to UPI in India.
The other fact is as the model is real-time, so its transactions would be limited in scale and value. So, initially, only ‘modest’ payments will be allowed.
Another person known to the development said, “If you want to send money or receive payment from a relative under the model you cannot do it through a foreign bank that is not a consumer bank in India. It would have to be done through a large India bank. In the United States, a person can use an American bank to send or receive money from there.”
