Earlier this year, we looked at how the drive for real-time payments in the West could benefit from studying the successes of India’s real-time payments network, UPI. Last week, we learned that there is at least one country in the Western hemisphere that’s taking us up on our suggestion and that country isn’t the United States, it’s Peru.
Launched in 2016, the National Payments Corporation of India’s United Payments Interface was built to support both peer-to-peer payments and transactions with merchants via mobile phone. The initiative has been hugely successful; in 2023, the number of UPI transactions exceeded 100 billion. The Indian government boasts that more digital transactions are completed in India than in any other country in the world.
Now, it looks like Peru is getting into the act. The Central Reserve Bank of Peru (BCRP) and India’s NPCI International Payments Limited (NIPL) have signed a deal to deploy a real-time payments system in Peru based on India’s UPI. This partnership makes Peru the first country in South America to adopt the technology. The development is a major feather in the cap of India’s fintech industry and another great example of how countries in Latin America are embracing fintech innovation to promote financial inclusion.
“This will undoubtedly offer new and accessible payment services to everyone, especially the unbanked population of Peru, complementing the existing payments industry,” BCRP governor Julio Velarde said. He referred to the partnership as a “significant step in strengthening and modernizing our payments system, aiming to expand access to digital payments in Peru.”
NIPL was launched in 2020 as the international arm of NCPI. Earlier this year, NIPL teamed up with French payments company Lyra Network to bring UPI payments to France. Outside of India, the UPI system is currently supported in Sri Lanka, Mauritius, the UAE, Singapore, Bhutan, and Nepal. Last month, NIPL announced that it was working to bring a UPI-type payment system to Namibia.
The arrival of UPI-based real-time payments in Peru will also bring innovations including QR code payments, biometric authentication, and AI-powered fraud detection. Alleviating the reliance on cash and enhancing financial inclusion and digital financial literacy are among the goals of the initiative.
It’s worth noting that Peru has made significant strides in helping move its citizens from the ranks of the un- and underbanked to full participants in the country’s financial system. In 2015, the number of adults with at least one financial product was approximately 35%. By 2020, this number had increased to more than 43% – and this was before the government’s pandemic-era decision that created millions of bank accounts for unbanked Peruvians to help facilitate aid payments.
Nevertheless, Peruvians remain relatively unbanked compared to those in neighboring countries. The unbanked constitute only 30% of the Brazilian population and only 26% of Chile’s. With a population of more than 32 million, Peru has its work cut out for it. But now, courtesy of NPCI, the third-largest nation in South America has help.
“We will be working together to address our common objective of promoting digital payments, financial inclusion, cost optimization, and transparency in the payment landscape, with scope for further scalability and adaptability, to embrace future technological advancements and market demands,” NPCI International CEO Ritesh Shukla said. “Once live, Peruvian citizens will gain access to an unparalleled level of convenience, security, and efficiency in financial transactions.”
For more on fintech news from around the world, be sure to check out our Finovate Global column, published every Friday afternoon.