ndia and the European Central Bank have entered the “realisation phase” of linking the Unified Payments Interface (UPI) with Europe’s TARGET Instant Payment Settlement (TIPS) system, in a rare moment where regulators are making life meaningfully easier for consumers. If implemented effectively, this will transform how millions of Indians in Europe send money home, how tourists pay abroad, and how small businesses transfer funds across borders. But as with every major digital-policy breakthrough, the promise will only hold if re gulators re sist the temptation to add new layers of fees, friction, and red tape. For years, cross-border payments have been a stubborn outlier in the blooming digital world.
Sending money from Europe to India still results in steep bank charges, hidden foreign exchange fees, and significantly long delays. Even the most advanced fintech solutions rely on intermediaries, which drives up prices, limits transparency, and erodes consumer confidence. UPI-TIPS has the potential to change that dynamic entirely. By linking two instant payment systems, transfers can move directly between Indian and European users in real-time, without the need for a chain of correspondent banks in the middle. For consumers, the benefits are substantial. Students, workers, and families split across continents will no longer need to wait days for remittances to settle. Immediate liquidity can make an enormous difference during emergencies, and lower fees ensure that more of the sender’s money reaches the recipient.
Small and medium-sized businesses, which are often hit hardest by costly and slow international payments, stand to gain from lower transaction costs (reducing the effort in time and money to arrange deals), thereby b o osting their cash flow and competitiveness. Indian tourists in Europe will also feel a tangible difference. Paying for meals, transport, or accommodation directly through UPI eliminates the need to rely on expensive card networks or to carry large amounts of cash. It mirrors the convenience Indians enjoy domestically, instant, secure, and familiar. And for European merchants, accepting UPI payments opens a door to one of the world’s largest consumer markets. This interlinking also strengthens India’s position as a global leader in digital infrastructure.
UPI has already expanded to Singapore, the UAE, Mauritius, Bhutan, Nepal, and parts of France. Linking with TIPS, Europe’s most extensive payment system, marks a milestone in India’s effort to globalise its digital public goods. Coming on the heels of the G20’s push for faster and cheaper remittance corridors, it signals that India’s model for payments innovation is gaining global trust. But while the economic gains and consumer benefits are obvious, they will only materialise if both sides remain committed to the system’s openness and low-cost design. Global payment reforms often begin with bold promises, but are besieged by creeping fees, compliance burdens, and regulatory turf wars. The India-EU link will be no exception if policymakers are not careful.
The first threat is fee creep. Banks, card networks, and legacy remittance players have strong incentives to protect existing revenue streams. Even small “processing fees” or widened foreign exchange (forex) spreads can undermine the affordability that makes UPI transformative. Ensuring transparent and competitive pricing will be critical to preventing monopolistic behavior. Second, regulatory overreach can inadvertently slow adoption. Europe’s privacy framework , while well-intentioned, has at times imposed heavy compliance costs on small businesses. India’s instinct toward data localisation can create its own rigidities in the form of multiple compliance layers, twofold infrastructure, laggy integration between cross-border payment networks.
When two regulatory systems overlap, complexity multiplies. The UPI-TIPS link must avoid this trap by designing a framework that protects user data without restricting legitimate financial flows or delaying transactions. Third, the system must remain genuinely interoperable. Consumers should be able to use the payment apps they prefer, whether operated by banks, fintech companies, or o ther providers. A close d, government-only rail may deliver political symbolism, but it will not provide the convenience and uptake necessary for global scale. Finally, policymakers must shield the project from the growing geopolitical push to build digital “walled gardens.” India and Europe both talk about digital sovereignty, but if this principle turns into a barrier to openness, consumers lose.
The strength of UPI lies in its accessibility and neutrality – a model that others are studying precisely because it avoids the dominance of any one political or economic player. The India-EU UPI link is an opportunity to set a global benchmark for open, consumer-centric digital payments. If regulators prioritise low fees, interoperability, and seamless data flows, this partnership can become a blueprint for the world. If not, it risks becoming just another well-intentioned reform slowed down by bureaucracy. Consumers ultimately decide whether innovations succeed or fail. The UPI-TIPS link will be no different. Its promise will be fulfilled only if the system remains what made UPI revolutionary in the first place: fast, transparent, and genuinely low-cost.
Publicado originalmente aquí
