SWFT vs UPI

May 20, 2023
Posted by: OptimizeIAS Team
Category: DPN Topics

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SWFT vs UPI

Subject: Economy

Section: External Sector

SWIFT

UPI

SWIFT stands for “Society for Worldwide Interbank Financial Telecommunication”. It was developed in 1973 and it is a messaging network for international transactions.
It is not a banking operation that transfers or stores the funds rather it is a means to communicate that the amount has been transferred securely
Though an independent cooperative society it is indirectly controlled by Western allies as it indirectly follows Belgian Law and EU commands as well.
As it has a monopoly on international transactions, whenever any nation challenges the Western ideology it is used as strategic tool to for economic isolation. Eg: Iran, Russia.

Unified Payment Interface (UPI) is a single-window mobile payment system developed by the National Payments Corporation of India (NPCI). It eliminates the need to enter bank details or other sensitive information each time a customer initiates a transaction.
It is an instant real-time payment system which facilitates P2P and person-to-merchant transactions.
The toughest barrier to UPI adoption is fraud or errors in real-time payments. Real-time payments are more vulnerable to social engineering frauds and there have been many cases when people have been cheated via digital transactions.

Also to be noted:

After Russian banks were cut off from SWIFT, the System for Transfer of Financial Messages (SPFS) was developed by Russia’s central bank as an alternative to SWIFT.
It has been suggested India now should also start developing its CBDC or digital rupee-based Global Payments Interface (GPI) for cross-border payments.
Japan, which said it was seriously considering joining Indian UPI to increase interoperability.
UPI and/or RuPay are already available in countries like Singapore, Nepal, Bhutan and United Arab Emirates (UAE) for Indians travelling there.
For non-resident Indians (NRIs), there are 10 countries which allow making payments (UPI) through their local phone numbers, including Australia, Canada, the UAE, Oman, Qatar, Singapore, Hong Kong, the UK and the US.

NIPL for tech diplomacy: NPCI International Payments Limited (NIPL) has been incorporated (“Company”) on April 3, 2020 as a wholly owned subsidiary of National Payments Corporation of India (NPCI). NIPL is devoted for deployment of RuPay (domestic card scheme) and UPI (mobile payment solution) outside of India.