UPI as an Alternative to Swift System [UPSC Notes] (2024)

FAQs

UPI as an Alternative to Swift System [UPSC Notes]? ›

The Swift system is the world's leading provider of financial messaging services and it would seem the indigenously developed UPI can replace Swift with its increasing global appeal. Japan is the latest country to seriously consider joining the UPI system for improving interoperability.

Transfer Speed: Chasing Time

UPI's promise of speed is unassailable within the Indian context, with transactions clearing within seconds. However, when it comes to international transfers, traditional systems like SWIFT can lag significantly, sometimes taking days.

Alternatives to SWIFT

SWIFT isn't the only system that facilitates international transfers. Airwallex is a payments and financial platform that leverages local payment networks — such as SEPA in Europe, ACH in the US, and BACS in the UK — to enable faster international money transfers.

Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.

Overseas markets accepting UPI payments include Singapore, Malaysia, UAE, France, Nepal, UK, Mauritius, Sri Lanka, to name a few.

The Swift system is the world's leading provider of financial messaging services and it would seem the indigenously developed UPI can replace Swift with its increasing global appeal. Japan is the latest country to seriously consider joining the UPI system for improving interoperability.

The UPI, a new-generation payment system, stands out for its open architecture and flexible user interface. No, UPI cannot replace SWIFT. There's a daily limit on UPI Transactions which is much lower compared to SWIFT. Apart from India, only Nepal has adapted the UPI interface.

In the ever-evolving world of digital finance, XRP, a cryptocurrency designed for seamless cross-border payments, is emerging as a frontrunner to replace the traditional SWIFT system and potentially become the preferred currency for Central Bank Digital Currencies (CBDCs).

The increasing global appeal of the Unified Payments Interface (UPI) is bolstering hopes that the indigenously developed system can emerge as an alternative to Swift — world's leading provider of secure financial messaging services — highly-placed sources in the government said.

Unlike SWIFT, which is a messaging network, CIPS offers clearing and settlement services, making RMB transactions faster and more cost-effective. CIPS facilitates trade and investment between China and other countries by enabling direct payments in yuan and onshore settlement.

What is the purpose of UPI? ›

UPI simplifies fund transfers between individuals and businesses, enabling online purchases, utility bill payments, and shopping at physical stores using QR codes, VPAs, or UPI-registered mobile numbers.

The National Payments Corporation of India (NPCI) developed the Unified Payment Interface (UPI). UPI allows real-time transfers between personnel accounts, banks and merchant accounts through mobile devices. It also facilitates instant bank-to-bank payments, making online payments convenient and easy.

The UPI ID of the recipient can be used to transfer money. It runs as an open source application programming interface (API) on top of the Immediate Payment Service (IMPS), and is regulated by the Reserve Bank of India (RBI).

Yes, NRIs can use UPI from their registered overseas mobile number from the approved geographies, i.e. Australia, Canada, France, Hong Kong, Malaysia, Oman, Qatar, Saudi Arabia, Singapore, UAE, UK and USA for INR transactions in India.

Bhutan was the first country to adopt UPI in 2021.

Unified Payment Interface (UPI) was developed by the National Payments Corporation of India (NPCI) which was established by the Reserve Bank of India (RBI) and Indian Banks Association (IBA). It enables real time, person to merchant transactions, inter-bank peer to peer transactions.

UPI vs.

UPI and NEFT are two convenient ways to move money digitally. UPI is like sending money at the speed of light through your phone. It is quick and easy, especially when you are using apps. On the flip side, NEFT is like the wise owl doing transfers in batches.

A SWIFT MT103 is a detailed document that is generated once you complete an international transfer at your bank. It acts as a confirmation of payment made from your bank and informs the beneficiary of all the details of the transaction, including any fees applied.

SWIFT is an acronym for the Society for Worldwide Interbank Financial Telecommunications. It may also be referred to as a BIC code (Bank Identifier Code). To receive an international wire transfer into your account, the sender will need U.S. Bank's swift code which is USBKUS44IMT.

SWIFT payments are transactions made through an intermediary bank that allows you to send/receive electronic payments internationally. The SWIFT network doesn't actually transfer funds, nor is it a banking system, Rather, it sends payment orders between banks using SWIFT codes.