India expands UPI payments to NRIs. How can Indian Australians benefit?

Almost seven years after the launch of an inter-bank, real-time payments interface in India, authorities are finally extending the services to non-resident Indians in 10 countries.

Australian Indians will soon be able to use the unified digital payments system in India Source: AFP / MANJUNATH KIRAN/AFP via Getty Images

Key Points

• The Indian government is extending the UPI facility to Non-Resident Indians living in 10 countries
• Australian phone numbers linked to NRI/NRO accounts can avail the facility
• Person-to-person and person-to-merchant transactions can be done using a phone number

Wollongong-based Manchu Palakunnel recently travelled to India for the first time in four years.

While he enjoyed his holiday, Mr Palakunnel said shopping was often an "embarrassing" experience due to the rise of digital payments.

Manchu Palakunnel was not able to use the UPI payments system in India during his recent visit. Credit: Supplied

“Not only the big supermarkets and shopping malls, but every small roadside shop has a digital payment system in place. It is everywhere.”

But Mr Palakunnel felt like an outsider in his home country.

“As a non-resident Indian, I was not able to use these digital payments systems,” he said.

Almost every shopkeeper asked for Google Pay or PhonePe payments.

Manchu Palakunnel

“I had to either keep big amounts in my wallet or ask my friends or relatives to make payments on my behalf. It was embarrassing."

The rise of digital payments

The Unified Payments Interface (UPI), which has contributed to the exponential growth in digital payments in India, has so far been restricted to Indian residents.

Many reports show that since the introduction of the UPI by the National Payments Corporation of India (NPCI) in 2016, the number and value of digital money transactions have increased by leaps and bounds.

The UPI allows inter-bank person-to-person and person-to-merchant instant money transfers using a mobile phone number, similar to the PayID system in Australia.

The NPCI has now decided to extend the facility to non-resident Indians living in 10 countries and holding bank accounts in India.

Digital payments have doubled in India in the last year Credit: Sasha India (CC By SA 2.0)

According to a circular released by NPCI, Non-Resident External (NRE) and Non-Resident Ordinary (NRO) account holders in these countries, including Australia, will be allowed to register and transact on UPI platforms.

“There has been customer demand in the ecosystem to enable UPI for their NR accounts have [sic] international number and experience the seamless and instant journey of UPI,” NPCI Chief of Products Kunal Kalawatia clarified in the circular.

It has also instructed the banks to ensure such accounts are only allowed as per the foreign exchange management regulations.

The deadline stipulated for member banks to enable this facility is 30 April.

Welcoming the announcement, P. V. Jithesh, the head of FinTech Partnerships at Federal Bank, one of the major private sector banks in India, said there was a huge demand from non-resident account holders for the facility.

“NRIs were not given access to this facility due to many technological and security reasons. But the new decision is going to be hugely helpful.”

He said previously only Indian phone numbers were allowed in the system, but now the country codes of 10 more countries, including Australia, Singapore, the USA, and the UK, would be added.

“If you hold an NR account in India, your overseas mobile number could be used to make digital payments,” he said.

“You will need to link your overseas number registered with the NRE and NRO accounts to UPI. This will enable peer-to-peer transactions and peer-to-merchant transactions.”

A user can transfer money to another bank account or pay at any shop using the phone number or scanning a QR code.

Mr Jithesh said this facility could be used when visiting India and overseas.

How can you use UPI?

Mr Jithesh explained that the UPI system helps a person link all his bank accounts using a single mobile app.

He said setting it up would be very simple.

P V Jithesh Credit: Supplied

“The mobile apps of most of the banks in India are UPI-ready. So, a customer can use any banking app or a third-party app like Google Pay, Bhim or PayTM and link all their bank accounts to it. UPI is bank-agnostic,” he said.

WhatsApp payment is also available through UPI

“When it is implemented, you can use your Australian mobile number to register in the UPI system. You can link any bank account associated with the number and you will need to give the details of an active debit card.”

He said the user would have to set up a personal identification number (PIN), which is needed for any UPI transactions.

“However, there will be a limit of 20 transactions and a maximum amount of INR 100,000 a day.”

Mr Palakunnel said he was excited to hear this announcement.

“I have been using digital payments in Australia, but it was hugely embarrassing to ask my friends or relatives to make payments on my behalf while visiting India. I hope it changes when I go next,” he said.