- Despite these hurdles, the initiative marks a milestone in India’s digital diplomacy
- UPI has already expanded to multiple countries, and partnering with Europe’s largest payment network strengthens its global footprint
- If regulators maintain low-cost, open design principles, UPI–TIPS could become a global benchmark for consumer-centric payments
India and the European Central Bank have entered the “realisation phase” of linking India’s Unified Payments Interface (UPI) with Europe’s TARGET Instant Payment Settlement (TIPS) system. If implemented smoothly, this cross-border bridge could revolutionise how Indians send and receive money across Europe, transforming traditional remittances, travel payments, and business transactions.
For decades, cross-border transfers have been costly and slow. Money sent from Europe to India often faces steep charges, high forex spreads, and multi-day settlement periods driven by layers of intermediary banks. Even fintech platforms rely on correspondent networks that add cost and complexity.
- UPI–TIPS promises a direct route: instant, low-cost transfers between Indian and European accounts without middlemen
- Students, workers, and families would receive funds in real time, improving liquidity during emergencies and ensuring more of each remittance reaches the intended recipients
- Small and medium enterprises would benefit from lower transaction costs, faster settlements, and improved cash flow, strengthening trade and competitiveness
Tourists stand to gain as well. Indians visiting Europe could pay directly through UPI apps, avoiding credit-card fees or currency-exchange charges. For European merchants, accepting UPI unlocks access to millions of Indian consumers accustomed to seamless digital payments.
However, the system faces several potential risks. The first is “fee creep,” where banks or third-party players could introduce new charges that dilute affordability. Regulators must safeguard transparent pricing to prevent monopolistic practices.
The second challenge is regulatory overlap. Europe’s strict privacy rules and India’s requirements for data localisation could create heavy compliance burdens if not harmonised. Without a streamlined framework, cross-border integration could slow, undermining the intent of instant payments.
A third risk concerns interoperability. Consumers should be able to use popular apps—not only government-owned platforms—to ensure widespread adoption. Limiting access could restrict convenience and reduce transaction volumes.
