The Central Bank of the Republic of Peru (BCRP) has taken a significant step towards enhancing financial inclusion by adopting a system similar to India’s Unified Payments Interface (UPI). This development comes under an agreement with the National Payments Corporation of India International Payments (NIPL), in collaboration with the Reserve Bank of India (RBI).
Enhancing Financial Inclusion
The adoption of the UPI system in Peru aims to address the country’s large unbanked population by enabling offline transactions, thereby promoting greater financial inclusion. The system is expected to enhance interoperability among domestic and international payment systems, offering more flexibility and options for financial transactions in Peru.
BCRP Governor Julio Velarde highlighted the system’s potential to “allow new participants to enter the Peruvian ecosystem” while “complementing the existing payments industry.” Although no specific launch date has been announced, the system’s implementation is eagerly anticipated.
More Payment Options for Peruvians
UPI users can link multiple bank accounts through mobile apps and utilize virtual payment addresses, phone numbers, and QR codes for transactions on a 24-hour basis. This will significantly increase the ease and security of making payments. An official statement from BCRP emphasized:
“The BCRP’s objective is to promote greater access, security, redundancy, and efficiency, as well as facilitate the introduction of new use cases in digital payments.”
Global Expansion of UPI
NIPL, established in 2020, has been progressively expanding the UPI system globally. Countries like Sri Lanka, Mauritius, France, the United Arab Emirates, Singapore, Bhutan, and Nepal officially support the UPI system. Recently, NIPL reached an agreement with the Bank of Namibia to develop a similar payment system.
New chapter has begun in FinTech cooperation between India & Peru. National Payments Corporation of India (NPCI) International @NPCI_NPCI 🇮🇳 & Central Reserve Bank of Peru 🇵🇪 signed an MOU for cooperation to implement a retail payments platform in Peru at Lima on 4.6.2024 pic.twitter.com/BIzlxOlkJx
— India in Peru & Bolivia (@eoilima) June 4, 2024
Prominent partnerships with Google Pay and financial institutions in the United States, Japan, China, and Singapore further underline UPI’s global influence. Singapore was the first country to adopt UPI, partnering with PayNow in February 2023.
Peru’s Digital Payment Ecosystem
In addition to adopting the UPI system, Peru is exploring other digital financial instruments. There are at least two stablecoins pegged to the Peruvian sol, and the country has been considering the introduction of a central bank digital currency (CBDC) since 2021. The BCRP has collaborated with monetary authorities from China, India, Singapore, and Hong Kong to develop a CBDC.
The adoption of India’s UPI system represents a significant leap forward for Peru’s financial inclusion efforts, promising to bring modern, secure, and efficient payment options to its citizens while setting the stage for further digital financial innovations.
