India and Russia are Mulling Payment System Integration
The governments of India and Russia are considering integrating their payment systems to counter the possible future impact of US sanctions on the capital flows of both countries. The move includes the integration of India’s Rupay cards and the Russian Mir cards to allow seamless payments between the two countries.
Payment Stacks Integration in Consideration
Russia
and India are mulling the integration of their payment stacks to counter the
possible fallout on their common payment flow from a hypothetical extension of
US sanctions in the future. In a recent high-level meeting between the Indian
External Affairs Minister, Subrahmanyam Jaishankar, and Russian Deputy Prime
Minister, Denis Manturov, the countries agreed to an integration to ease capital flow
between both countries.
The
agreement includes the acceptance of the Rupay cards in Russia and the Mir cards in India, allowing citizens of both countries to make cross-border
payments using native debit cards.
There
were also discussions of higher integration, with officials of both countries
agreeing to explore the integration of the payment stack. The Unified Payments
Interface (UPI) of India and the Faster Payments System (FPS) of Russia.
India
has been active in integrating its payment system with other countries. In
February, it linked Paynow, Singapore’s payments system, into its payment stack, allowing cross-border payments between the two
countries without using additional payment bridges.
Move to Reduce the Impact of US Sanctions
The
primary objective behind the move is possible preparation for a possible extension of US sanctions that could sever the
connection between the banking systems of the two countries and make the
possibility of direct payments unfeasible. While the preparations are intended
for the future, Indian companies have not been able to collect payments linked
to dividends of Russian oil companies due to the sanctions imposed by the US
government on Moscow.
According
to reports, ONGC Videsh Ltd., Oil India, Bharat
Petroleum Corporation, and Indian Oil Corporation are four Indian companies
with blocked payments estimated at between USD 300 and 400 million since last
year due to the disconnection of Russian banks from the Worldwide Interbank
Financial Telecommunication (SWIFT) system, which allows for cross-border
payments using the current banking system.
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