UPI payment: How NRIs would benefit from global expansion of this Made-in-India system

 

The Unified Payments Interface (UPI) has not only become a cornerstone of India's financial development but also attracted applause from global figures like Bill Gates during the G20 summit in New Delhi.

Nilesh Choudhary, CEO & Founder of Aikyam Capital Investors, emphasizes the game-changing impact of UPI for Non-Resident Indians (NRIs). He highlights the ease of sending funds for critical and immediate needs like healthcare and education, even from thousands of miles away.

Traditionally, NRIs have relied on various methods to send money back to India, each with its own set of complexities and limitations.

“The introduction of the UPI for NRIs has been a game-changer, especially in terms of money transfers. UPI simplifies the entire process by enabling quick and easy transfers directly from a mobile device," said Kunal Varma, CEO and Co-Founder, Freo.

NRIs can use UPI while staying abroad by linking their Non-Resident Ordinary (NRO) or Non-Resident External (NRE) accounts with a UPI-enabled app, added Kunal.

Advantages of UPI for NRIs

1)UPI transactions do not require the sender to input lengthy bank account details of the recipient. Instead, they can simply use a UPI ID or a QR code or phone number, which substantially reduces the chance of errors.

2) Lower cost of transactions.

3)UPI provides enhanced security features, which is a critical aspect of any financial transaction. The transaction process through UPI is secured with a two-factor authentication system, adding an extra layer of security compared to some traditional methods.

How NRIs can do UPI Payments

Bank Account Requirements

Ensure you have an NRO or NRE account with a bank in India that supports UPI transactions.

Mobile Number

Register your foreign mobile number with your bank account. This is crucial because UPI apps use mobile numbers for verification.

Choose a UPI App

Select a UPI-enabled app. Many Indian banking apps and third-party apps like Google Pay, PhonePe, Paytm, and others support UPI transactions.

Installation and Setup

Install the chosen UPI app on your smartphone. During the setup process, you will need to verify your mobile number. Since you're abroad, make sure the app allows verification via your foreign number, or you might need to use an Indian number initially for setup.

Link Bank Account

Link your NRO/NRE account to the UPI app. This usually involves selecting your bank from a list and letting the app fetch your account details automatically through your mobile number.

Set UPI PIN

You will need to set a UPI Personal Identification Number (PIN) for transactions. This is usually done by entering a one-time password (OTP) sent to your registered mobile number and then creating a UPI PIN.

Start Transacting

Once set up, you can start using UPI for payments and transfers. You can send money to other UPI users, pay bills, or make purchases online.

Limits and Regulations

Be aware of transaction limits and any regulatory requirements, especially those about foreign exchange regulations under FEMA (Foreign Exchange Management Act).

“It's important to note that while the process is relatively straightforward, some users may face challenges due to restrictions on the use of foreign mobile numbers or internet banking limitations imposed on NRO/NRE accounts," said Kunal Varma.

Additionally, regulations and features of UPI for NRIs may change, so it's advisable to check with your bank or the app provider for the most current information, he added.

The integration of UPI with over 10 countries, including UAE, UK, Mauritius, and Singapore, demonstrates India's strategic vision for economic resilience.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.