OPINION | From PayNow to PayNext: How India’s UPI can power ASEAN’s digital economy future

The Reserve Bank of India (RBI) estimates that UPI now accounts for about 85 percent of India’s digital retail payment volume, a level of adoption unmatched by any comparable economy.

Benefits of an open, interoperable architecture

What makes UPI distinctive is not just its scale but also its design. Its open, interoperable architecture allows banks and fintech companies to plug into a single low-cost network, creating a digital public good rather than a proprietary platform. The UPI system now serves 491 million individuals and 65 million merchants. It connects 675 banks on a single platform, allowing people to make payments easily without worrying about which bank they use.

That same model is now attracting global attention. In February 2023, India and Singapore formally linked UPI with PayNow, enabling users in both countries to send and receive money instantly, directly from one bank account to another.

The launch, jointly announced by the Monetary Authority of Singapore (MAS) and RBI, was hailed as a milestone in digital diplomacy. Since then, the network has expanded to 19 Indian banks, widening access for individuals and small businesses. This linkage has already reduced remittance costs and processing times from days to seconds, a practical demonstration of how regional interoperability can work.

Prevalence of silos in ASEAN

The timing could not be better. ASEAN’s digital economy is booming, but cross-border payments remain fragmented and expensive. Remittance costs within the bloc still hover around 3–5 percent per transaction, and settlements can take several days. For MSMEs and digital merchants that depend on timely payments, those delays and fees are a barrier to growth.

India’s experience offers both a blueprint and a partnership model. UPI demonstrates how a public digital infrastructure approach can scale inclusion at low cost while maintaining security and speed. It’s already finding resonance globally in countries such as the UAE, France, Mauritius, Bhutan, and Nepal, as Indian travellers can use UPI-linked systems in retail or tourist contexts, and rollout discussions or pilots are underway in others. Extending this approach to ASEAN could give the region a unifying payments backbone that complements its trade and connectivity goals.

Policy environment is favourable

Policy frameworks across the region are beginning to align. The ASEAN Leaders’ Declaration on Advancing Regional Payment Connectivity and Promoting Local Currency Transactions commits members to linking domestic fast-payment systems and promoting local-currency settlement.

Meanwhile, the BIS-led Project Nexus, involving India, Singapore, Malaysia, the Philippines, and Thailand, is developing a multilateral model for real-time cross-border payments. These efforts together create the foundation needed to scale bilateral linkages such as UPI–PayNow into a broader regional payments network.

Success, however, will depend on more than technology. Each ASEAN country has its own rules on data protection, anti-money-laundering compliance, and consumer redress. Currency-settlement mechanisms and cybersecurity protocols will need to be harmonised. Yet India’s domestic journey offers lessons: the collaboration between RBI, NPCI, banks and fintechs shows how inclusive governance and open standards can build trust at scale. A similar spirit of co-creation, not export, will be key to expanding UPI across the region.

Not just payments

The potential impact extends well beyond consumer payments. Once systems are interoperable, trade settlements, supply-chain payments, subscription services, and education-fee transactions can move seamlessly. For banks and fintechs, that means lower back-office costs and new market opportunities; for governments, it strengthens financial-inclusion goals; for citizens, it turns cross-border payments into a one-tap experience. The tourism and remittance benefits are evident, but they’re only part of a much larger transformation in how regional economies transact and trust each other digitally.

Needless to say, there will still be challenges. Partners will seek assurance that this is about shared innovation, not dominance. Merchant acceptance and user awareness will take time. Data governance concerns will require sensitive handling, particularly among countries wary of cross-border data flows. The payoff justifies the wait; the payment infrastructure is the unseen backbone of the modern economy, and when that backbone is strong, trade, innovation, and inclusion move faster and farther.

In Kuala Lumpur this week, ASEAN’s leaders are not just discussing trade or connectivity, they are defining how the region positions itself in a shifting geopolitical order. For ASEAN and India alike, the conversation in Kuala Lumpur isn’t just about linking economies, but about wiring them for the digital decade ahead. UPI offers a practical pathway, a demonstration that cooperation in technology can move faster than treaties or trade deals. If the region can connect its payments, it can connect its people, markets, and ideas. From PayNow to PayNext, the opportunity is clear: to build a seamless financial backbone for Asia’s next growth wave.

(Suryaprabha Sadasivan is Senior Vice President, Chase Advisors.)

(Views expressed are personal and do not represent the stand of this publication.)