India’s Unified Payments Interface (UPI) is taking the lead in enhancing cross-border payment systems, as acknowledged by US Treasury Under Secretary for International Affairs, Jay Shambaugh. Speaking at Harvard Law School, Shambaugh highlighted India’s UPI as a key player in fostering bilateral ties with nations like Singapore and the United Arab Emirates.
In his address on Wednesday, Shambaugh elaborated on the global shift towards more efficient, transparent, and accessible payment systems. He underscored the ongoing endeavours to revamp outdated payment infrastructures worldwide, with stakeholders from banks, payment service providers, and Financial Market Infrastructures (FMIs) investing in operational advancements.
A notable instance is the global move towards implementing the ISO 20022 messaging standard, known for its data-rich nature facilitating streamlined payment processing, quicker messaging, and reduced payment failure rates.
Shambaugh pointed out the growing trend among nations with robust bilateral economic relations, like India, to interlink their rapid payment systems. He specifically applauded India’s UPI system for its role in advancing bilateral connections through its interoperable payment infrastructure.
On a broader scale, Shambaugh referenced the ambition of ASEAN nations to multilaterally interconnect their fast payment systems, aligning with the ‘G20 Payments Roadmap’. This roadmap, emphasising “payment system interoperability and extension”, aims for enhanced payment system connectivity and operational alignment along key global corridors.
With the G20’s focus on instant cross-border payment and settlement, Shambaugh noted the positive impacts already emanating from upgrades to legacy systems. He further delved into the exploration of new financial technologies, including Cross-Border Central Bank Digital Currencies (CBDCs) and Distributed Ledger Technology (DLT)-based payments.
Shambaugh expressed optimism for these emerging technologies, envisioning a potential overhaul of cross-border payment systems. He highlighted the additional benefits like cost transparency, instantaneous settlements, and programmable payments, which could significantly elevate efficiency while minimising risks in global financial transactions.
