India and Singapore are set to enhance their financial ties by launching a cross-border payment connectivity between two of their most popular payment systems, UPI and PayNow.

The move is expected to enable faster and cost-efficient transfer of money between the two countries.

RBI governor Shaktikanta Das and Ravi Menon, managing director of Monetary Authority of Singapore will launch the cross-border payment connectivity.

The launch of real-time payment systems linkage between the two countries will be witnessed by Prime Minister Narendra Modi and his Singapore counterpart Lee Hsien Loong on Tuesday (21 February).

UPI, or Unified Payments Interface, is a real-time payment system developed by NPCI that allows users to instantly transfer money between bank accounts using a mobile device. PayNow is a similar system developed by MAS for users in Singapore.

The linkage of these two payment systems would enable residents of both countries in faster and cost-efficient  transfer of cross-border remittances, the Prime Minister's Office said on Monday (20 February).

Further, it will also help the Indian diaspora in Singapore, especially migrant workers and students through instantaneous and low cost transfer of money from Singapore to India and vice-versa, it added.

After the two systems are connected, fund transfers can be made from India to Singapore using mobile phone numbers, and from Singapore to India using UPI virtual payment addresses (VPA). The experience of making a PayNow transfer to a UPI VPA will be similar to that of a domestic transfer to a PayNow VPA.

The cross-border connectivity between the two systems will allow users in India and Singapore to transfer money to each other's bank accounts in real-time 24x7. This will eliminate the need for intermediaries and reduce the transaction time and cost.