Peru to Launch Instant Payment System in Partnership with India's NPCI

Team finance Saathi

06/Jun/2024

Key Points:

NPCI's international arm, NIPL, has partnered with the Central Reserve Bank of Peru (BCRP) to develop an instant payment system using UPI technology.
This collaboration marks NIPL’s second central bank partnership to implement the UPI stack internationally, following a similar project in Namibia.
The new system aims to improve financial inclusion, security, and efficiency, benefiting Peru's unbanked population and fostering economic growth.

Peru is set to revolutionize its financial landscape with the implementation of an instant payment system similar to India's Unified Payments Interface (UPI). This development comes as NPCI International Payments Limited (NIPL), the international arm of the National Payments Corporation of India (NPCI), has signed an agreement with the Central Reserve Bank of Peru (BCRP) to introduce this advanced payment technology in the South American nation. The move is part of NPCI's broader strategy to internationalize UPI and promote digital financial inclusion worldwide.

International Collaboration and Objectives

The collaboration with Peru marks NIPL’s second partnership with a central bank to roll out the UPI stack internationally. In May 2023, NIPL entered into a similar agreement with the Bank of Namibia (BoN) to develop an instant payment system in Namibia. According to Ritesh Shukla, CEO of NIPL, "Our partnership with the BCRP aims to strengthen Peru’s financial infrastructure and foster economic growth. Once operational, Peruvian citizens will benefit from unparalleled convenience, security, and efficiency in financial transactions."

The primary objective of this partnership is to facilitate instant payments between individuals and businesses, thereby extending digital payments to Peru’s unbanked population. This initiative aligns with BCRP's goal to promote financial inclusion, security, and efficiency within the country. Julio Velarde, Governor of BCRP, emphasized the importance of this development, stating, "The support of the Reserve Bank of India (RBI) has been a cornerstone of this agreement. The BCRP aims to introduce new use cases in digital payments, foster innovation, and allow new participants to enter the Peruvian ecosystem."

Expanding UPI’s Global Footprint

NPCI's efforts to internationalize UPI have already seen significant success in various markets. Notably, the organization has expanded its footprint to countries such as France, Sri Lanka, Singapore, and Mauritius. In January 2024, NPCI launched the UPI-PayNow linkage, which enables seamless remittances between India and Singapore, allowing funds to be directly transferred into bank accounts. In February 2024, NPCI partnered with the French e-commerce and proximity payments company Lyra to facilitate UPI acceptance in France. The same month, UPI services were also rolled out in Sri Lanka and Mauritius, further establishing UPI as a versatile and globally accepted payment system.

Benefits of the Instant Payment System

The implementation of an instant payment system in Peru is expected to bring numerous benefits:

Financial Inclusion: By extending digital payment capabilities to the unbanked population, the system aims to integrate more individuals into the formal financial system, reducing the reliance on cash transactions.
Convenience and Efficiency: The system will enable real-time payments, offering unprecedented convenience and efficiency for both personal and business transactions.
Security: Enhanced security features will safeguard financial transactions, building trust among users and encouraging the adoption of digital payments.
Economic Growth: By streamlining payment processes and facilitating quicker financial transactions, the system is expected to stimulate economic activity and growth.

Future Prospects and Innovations

As Peru prepares to launch its instant payment system, the collaboration with NPCI sets a precedent for future innovations in the digital payment space. The initiative is likely to inspire other countries in the region to adopt similar technologies, furthering the cause of financial inclusion and digital transformation.

The successful implementation of UPI technology in Peru could pave the way for more international partnerships and collaborations, showcasing India's expertise in developing scalable and secure payment solutions. It also highlights the potential for cross-border financial integration, enabling smoother and more efficient financial transactions between countries.

Conclusion

The agreement between NPCI International Payments Limited and the Central Reserve Bank of Peru marks a significant milestone in the global expansion of UPI technology. This partnership not only aims to enhance Peru's financial infrastructure but also to drive economic growth and promote financial inclusion. As Peru joins the growing list of countries adopting UPI, the benefits of real-time, secure, and efficient digital payments will become increasingly accessible to its citizens, setting the stage for a more connected and prosperous future.

The collaboration underscores the pivotal role of innovative payment systems in transforming economies and fostering global financial inclusion. With the continuous support of RBI and strategic partnerships, NPCI is poised to lead the charge in making digital payments a universal standard, bringing the world closer to a cashless economy.

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