UPI’s global expansion revolutionising cross-border transactions

Mayank Goyal, Founder & CEO, moneyHOP

UPI has already seen immense success on the domestic front being the digital and most used real time settlement system across the globe. Likewise, there is a lot that can/should be done to push INR as the currency of choice at least with the nations we trade with whereby we don’t necessarily have to make the payment in USD but in INR, shares Mayank Goyal, Founder & CEO, moneyHOP in an exclusive interaction with Srajan Agarwal of Elets News Network (ENN).

Can you share with us the journey that led you to found moneyHOP? What inspired you to enter the fintech industry and tackle cross-border payment challenges, and what were some of the biggest obstacles you faced along the way?

After completing B.Tech in Bangalore, he pursued M.S. in Imperial College London. While studying in London, he had taken an education loan from a public sector bank. Other than the usual interest rate, the bank also charged him with a significant percentage of remittance fee which he didn’t understand at that point due to the lack of awareness. Also, every time his acquaintances visited him from India, the currency exchange process used to be cumbersome and full of markups. The firsthand observation of challenges and high costs associated with international money transfers in India led him into leaving his high-paying job as an investment banker in London to pursue moneyHOP. Their mission is to provide a digital cross-border banking solution that offers better rates, convenience, and transparency for millennials in India. He wanted to build a product that provides instant gratification, convenience, and transparency in cross-border transactions, as modern millennials want to travel the world, live in different parts of the world, study abroad, and don’t want to limit themselves to just one country.

There are three factors that mainly drove him to start this venture:

  • It was an emerging market focus and there is a lot of potential and scope for innovation in the cross-border banking sector.
  • The market size is big enough for us to make this a scalable business.
  • The problems associated with cross-border payments are also very personal to me. Having spent close to a decade in the UK I had a firsthand experience of inefficiencies associated with the cross border banking system in India.

One of the biggest challenges that moneyHOP faced was navigating the highly regulated nature of the financial services industry. To overcome this challenge, they partnered with established financial institutions to ensure credibility and regulatory coverage. They also sought support from industry associations and accelerators for guidance on regulatory issues and to establish relationships with potential partners and investors. They invested in compliance and regulatory affairs internally by hiring a team of legal professionals. Despite these provocations, they have been successful in helping over 50,000 students to save over USD 3 million in banking fees, and continue to strive towards their mission of providing a better banking experience for international students and travelers.

Recently, SWIFT announced its plan to create a system for interlinking CBDCs (Central Bank Digital Currencies) across the globe. How do you see this development impacting the global financial landscape, and what role do you envision moneyHOP playing in this ecosystem?

SWIFT’s plan to create a system for interlinking CBDCs across the globe is a significant development in the financial landscape. It has the potential to transform cross-border payments, making them faster, cheaper, and more secure. Currently, cross-border payments involve several intermediaries, which can make the process slow and costly. SWIFT’s system aims to address these issues by creating a seamless cross-border payments network that connects all the CBDCs of various countries.

The impact of this development on the global financial landscape could be enormous. If successful, it could reduce the reliance on the US dollar as the global reserve currency, as more countries adopt CBDCs and use them for cross-border payments. It could also increase financial inclusion, as more people in developing countries would have access to digital currencies, which are easier to use and more convenient than traditional banking systems.

As for moneyHOP, their products can play a vital role in this ecosystem by providing a bridge between different CBDCs. As a cross-border payments solution company, moneyHOP could facilitate the exchange of CBDCs between different countries, providing a seamless and secure way to transfer money across borders. Additionally, moneyHOP could also provide liquidity to CBDC markets, making it easier for people to exchange CBDCs through the app for other digital assets or currencies.

With UPI (Unified Payments Interface) gaining widespread adoption in India and now looking to expand globally, how do you see this payment system impacting cross-border transactions, particularly in terms of speed, cost, and convenience? And what challenges do you foresee in UPI’s global expansion, and how can they be overcome?

The recent announcement by the Reserve Bank of India (RBI) allowing foreign nationals and NRIs visiting India to use the mobile-based Unified Payments Interface (UPI) for their merchant payments is a significant step towards UPI’s global expansion.

In terms of impact, this is a major development that will make payment processing easier and more convenient for tourists visiting the country while also making India an attractive destination for international travelers. UPI’s expansion could also bring about several benefits for cross-border transactions, such as increased speed, reduced costs, and improved convenience. With UPI being available for G20 countries, citizens will be able to make instant transactions, eliminating the need for lengthy waiting periods (usually 48-72 hours) associated with traditional cross-border transactions. Additionally, UPI’s cost-effectiveness and ease of use could potentially lower transaction fees and simplify the payment process for users.

However, UPI’s global expansion is not without its challenges. One significant challenge is the need to comply with different regulations and payment system standards across different countries, which could prove time-consuming and expensive for UPI stakeholders. Moreover, the lack of interoperability between different payment systems could also hinder UPI’s global expansion.

To overcome these challenges, UPI stakeholders could focus on collaborating with global payment system providers and regulators to ensure compliance with local regulations and standards. Additionally, efforts could be made towards promoting interaction between different payment systems. Collaborative efforts between UPI stakeholders, payment system providers, and regulators could help overcome these challenges and pave the way for UPI’s successful global expansion.

The recent banking crisis in the US has raised concerns about the stability of the global financial system. As India seeks to increase its trade settlement, what lessons can be learned from the US crisis, and what steps should India take to minimize the fallout and ensure such a crisis doesn’t occur in the Indian banking sector?

For the longest time the US has been one of the largest economies of the world and with USD dominating the world forum as the option of choice for foreign currency reserves and trade settlements. With the recent events in the last two decades, i.e. the 2008 crisis and the more recent one with SVB bank going down, has raised significant concerns amongst the global economy around the reliance of US banks but also US dollars as credit currency. India has been burgeoning and gaining importance lately on a global scale with events like UPI going global for G20 countries.

UPI has already seen immense success on the domestic front being the digital and most used real time settlement system across the globe. Likewise, there is a lot that can/should be done to push INR as the currency of choice at least with the nations we trade with whereby we don’t necessarily have to make the payment in USD but in INR. Sufficient steps are being taken by the foreign ministry and finance ministry to strengthen the global network and relationship that India has with different countries. This will help us reduce the dependence on US dollars as the foreign currency reserve that exists for any import and export that India does as a nation. Secondly, it also makes sure that the diversification that we have in terms of foreign currency reserves is significantly higher.

Also Read | Axis Bank supports real-time cross-border transaction settlement using UPI network

One key lesson to be learned from this fallout is the importance of having a strong regulatory framework to ensure the stability of the banking system. In India, the RBI has already taken steps to classify some of the country’s major banks as Domestic Systemically Important Banks (D-SIBs) and requires them to earmark additional capital and provisions to safeguard their operations. This classification ensures that these banks are better equipped to handle any potential risks and are less likely to fail. In addition, the government should also work to strengthen the country’s energy security by promoting renewable energy and reducing its reliance on oil imports.

Another lesson is the importance of diversifying sources of capital and reducing reliance on foreign investors. The recent crisis has highlighted the vulnerability of tech startups and IT firms to banking collapses and the resulting challenges in raising capital. Indian businesses should explore alternative funding sources, such as angel investing or government grants, to reduce their reliance on foreign investors.

With moneyHOP gaining traction and expanding its reach, what are your future plans for the company? Are there any new product offerings or partnerships in the works that you can share with us?

MoneyHOP intends to become a global player in terms of cross-border payments and remittances starting from India and then expanding into other emerging market geographies. They are in the process of setting up a working office in London and Dubai in order to increase the transactions they do cross-borders between various countries. They will also soon be expanding into helping MSMEs in emerging markets starting from India to effectively receive money for their imports and exports on a global level.

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