You can soon use UPI for payments in the UK
What's the story
India and the United Kingdom have signed a free trade agreement (FTA) that will allow citizens of both countries to use each other's fast payment systems. The move is aimed at making cross-border transactions easier and more efficient by allowing QR code-based merchant payments and instant fund transfers. Indians visiting the UK can soon make payments using UPI accounts on their phone, while a UK resident can send money digitally to India to their loved ones.
Impact
Agreement to reduce transaction costs
The provision for fund transfer is included in the ANNEX 9A of the Comprehensive Economic and Trade Partnership Agreement (CETA), inked on July 24. Nitesh Singhal, founder of fintech consultancy Aryaa Advisors, said this will greatly improve user convenience, reduce transaction costs, and also enable faster trade and remittance flows.
Global reach
Integration of UPI with real-time payment systems
Singhal also noted that this move is part of India's strategy to integrate UPI with real-time payment systems in countries like Singapore and the UAE. This would enable direct transfers without multiple intermediaries or currency conversions. The process is likely to be implemented once the trade agreement comes into force, which could take up to a year due to lengthy ratification processes in Britain.
Economic benefits
Arrangement could boost tourism
The FTA is expected to ease remittances from India's third-largest source, the UK. Its share in remittances into India increased to nearly 11% in 2023-24 from 3% in 2016-17. The arrangement could also indirectly boost tourism, according to British government estimates.