PhonePe taps cross-border UPI payments to generate revenue •

    Indians traveling to many foreign markets, including the UAE and Singapore, may soon be able to use the popular UPI payments to make purchases when they land there.

    Fintech giant PhonePe, headquartered in Bengaluru, said on Tuesday it is expanding support for international UPI payments in the UAE, Singapore, Mauritius, Nepal and Bhutan.

    “Users can make foreign currency payments directly from their Indian bank just as they do with international debit cards,” PhonePe said in a statement.

    The move appears to be PhonePe’s attempt to capture a slice of the large forex market, a category where there is a clear way for payment apps to make extra money, according to fintech industry executives unrelated to PhonePe .

    PhonePe’s move is also in line with the view of NPCI, the body that oversees UPI payments, which believes that Indians in many foreign cities, including Dubai, will not have to use any other payment method within this year, according to one of the fintech execs.

    A number of other fintech apps are also expected to add cross-border UPI support in the coming months. Built by a coalition of retail banks in India, UPI is the most popular way for Indians to transact online. It processed more than 8 billion transactions last month. UPI international is on NPCI’s current roadmap.

    Onboarding merchants to accept the UPI payments in the foreign markets will be an important test for India’s NPCI as without merchants users of PhonePe and other Indian UPI payment apps will not be able to make payments. Ideally, the UPI players on the acquiring side will need to partner with local payment processors or aggregators who can widely expand support for UPI among the local merchants. While the UPI QRs are ubiquitous in India, that is not necessarily the case elsewhere.

    It’s not the first time a mobile payment app has tried to serve its home users in international markets. WeChat Pay and Alipay offer a similar service to their customers in many countries. But even for the Chinese players, merchant adoption has been the main growth challenge abroad.

    PhonePe is the most valuable fintech startup in India. Valued at $12 billion, the startup generated revenue of $234.3 million in the first nine months of 2022. The Walmart-backed startup is the most popular UPI app, accounting for more than 50% of the market share. But UPI currently has no business model, forcing participating players to look at other ways to make money.

    “UPI international is the first big step in bringing the rest of the world to experience UPI as well,” Rahul Chari, co-founder and chief technology officer of PhonePe, said in a statement.

    “I am sure this launch will prove to be a game changer and completely change the way Indians traveling abroad to pay at outlets abroad. PhonePe has always prided itself on being the first TPAP to bring new UPI features to the market, and this time is no different. We are happy that PhonePe is leading this change. The whole world needs to experience UPI!”

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