By News On Air Jul 07, 2024
A landmark development is underway. The UAE is making steady progress toward adopting India’s Unified Payments Interface, or UPI. This move is set to revolutionize digital transactions for Indian tourists and residents in the Emirates. Earlier this year, in February, Prime Minister Narendra Modi and UAE President Sheikh Mohammed Bin Zayed Al Nahyan officially launched UPI services in Abu Dhabi. This marks a significant milestone in India-UAE relations, showcasing their commitment to enhancing financial connectivity and digital innovation.
Following the leaders’ initiatives, Mashreq, a leading financial institution in the MENA region, partnered with the National Payments Corporation of India to integrate UPI-enabled apps like PhonePe with their NEOPAY payment platform in March 2024. This collaboration allows Indian travellers to use their preferred UPI apps for transactions across retail stores, dining outlets, and tourist attractions in the UAE. By combining PhonePe’s technology with Mashreq’s to top-tier tech and innovation, this partnership promises to enhance the customer experience at NEOPAY terminals.
But Mashreq isn’t the only one capitalizing on this opportunity. Earlier this week, Network International, a major digital commerce enabler in the Middle East and Africa, also joined forces with NPCI International. They’re extending UPI services to over 200,000 point-of-sale terminals across 60,000 merchants in the UAE. This means that almost everywhere you go, from luxury malls to charming local shops, the familiar UPI payment method will be at your fingertips.
To initiate an international UPI transaction, the user must have a UPI-enabled mobile application linked to their bank account in India. The first step in a transaction is to convert the amount from Indian Rupees to UAE Dirhams. The issuing bank authorizes the transaction to facilitate the conversion as per the regulatory compliance of both countries. This authorization takes place with the help of intermediaries involved in cross-border transactions. The payee’s bank in the UAE receives the authorization and verifies the transaction details. The system works similarly to AANI, the UAE’s own instant payment platform.
The adoption of UPI in the UAE extends beyond convenience for Indian tourists. It’s a significant step toward achieving the economic goals of both nations, including their non-oil trade targets. The UAE’s economy, known for its robust trade relations and dynamic business environment, stands to benefit immensely from the seamless transaction capabilities that UPI brings. The timing of this initiative couldn’t be better. The UAE is expecting 5.29 million Indian visitors in 2024, representing a substantial number of potential UPI transactions. These figures highlight the enormous potential for economic exchange and the pivotal role that UPI can play in facilitating this flow.
The UPI system in India is a powerhouse, processing over 14 billion transactions in May 2024 alone. Its expansion into the UAE is a game-changer for cross-border payments. The global expansion of UPI offers numerous benefits. It provides a familiar and secure payment option for Indian tourists and the global Indian diaspora and stimulates trade between India and other countries through faster and easier cross-border payments.
Beyond these immediate benefits, the integration of UPI in the UAE can pave the way for more innovative financial solutions. As more merchants and consumers adopt UPI, the data and insights gained can drive further advancements in digital payments, security protocols, and customer service enhancements. As more financial institutions in the UAE embrace UPI, we could be witnessing the dawn of a new era in international digital payments. The steady path to UPI adoption in the UAE is not just a technological advancement but a testament to the growing economic ties between India and the UAE. The successful implementation of UPI can serve as a model for other nations looking to enhance their digital payment infrastructure and foster stronger economic partnerships.