In a significant development, Japan is considering joining the United Payments Interface (UPI) system and fostering cooperation on the digital identity system, according to Japanese Digital Minister Kono Taro in an interview with Wion. The move comes as the National Payments Corporation of India (NPCI) aims to promote UPI services in foreign countries.
Taro emphasized the convenience and interoperability of the UPI system, stating that it could serve as a standard for cross-border payments and enhance cooperation between governments. He also mentioned that the G7 nations are establishing a new framework on cross-border data flow, and Japan hopes that the Indian government will participate in this initiative.
Japan’s interest in joining the UPI system and recognizing digital identities is a testament to the global recognition of India’s Digital India vision. Information Technology Minister Ashwini Vaishnaw expressed gratitude to the Japanese digital minister for embracing Prime Minister Narendra Modi’s extensive vision of Digital India.
India’s UPI has gained significant traction worldwide, with Nepal becoming the first country, apart from India, to adopt the digital payments service in February 2022. The deployment of UPI has also taken place in several Middle Eastern countries, and a cross-border linkage between UPI and Singapore’s PayNow was established earlier this year to facilitate international payments.
The expansion of UPI has prompted leading payment players like PhonePe and Paytm to take measures to capitalize on its growth. PhonePe integrated UPI International into its app, enabling users to make payments in foreign currencies directly from their bank accounts. Paytm also plans to launch its ‘UPI International’ service on its app in the near future, according to a spokesperson from the fintech company.
Despite a slight decline of 0.24% in UPI transaction volume in April 2023 compared to the previous month, UPI remains a dominant force in India’s digital payment ecosystem. PhonePe, Google Pay, and Paytm collectively captured a 94% market share in terms of UPI transactions processed in March 2023, with Paytm processing 128.84 crore transactions worth INR 1.54 lakh crore during the month, as per NPCI data.
Japan’s potential entry into the UPI system signifies the growing prominence of India’s digital payment infrastructure on the global stage, and it opens up new possibilities for cross-border payment collaborations and digital identity recognition between the two countries.
