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(Kitco News) - The move away from the U.S. dollar by major players on the global stage continues to unfold as reports have emerged that India and Russia are exploring the possibility of integrating each other’s payment systems as a workaround to sanctions imposed by the West on Moscow.
According to a report from The Economic Times of India, during the recent high-level Internal Governmental Commission meeting on Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC), the two countries discussed and agreed to explore the integration of their respective RuPay and Mir cards payments systems.
During the meeting, which was co-chaired by External Affairs Minister S Jaishankar and Russia Deputy Prime Minister Denis Manturov, the representatives also agreed to explore the integration of India’s Unified Payments Interface (UPI) with the Bank of Russia’s Faster Payments System (FPS).
Sources said that the mutual acceptance of India’s RuPay system in Russia and Russia’s Mir cards in India would help citizens of the countries make hassle-free payments in Indian rupees and Russian rubles in their respective countries.
To help with facilitating cross-border transactions between the countries, India has agreed to explore adopting Russia’s financial messaging system, the Financial Messaging System of the Bank of Russia (SPFS).
Cross-border transactions between India and Russia are currently conducted using the SWIFT network, which is controlled by the U.S. Shortly after the invasion of Ukraine, countries in the West instituted sanctions against Russia, which included cutting off seven prominent Russian Banks from the SWIFT system.
With the conflict now extending into its second year, countries such as India that have well-established trade partnerships with Russia are increasingly looking for workarounds to the sanctions. The use of local currencies and local payment systems is fast becoming a preferred option over continuing to utilize SWIFT and the U.S. dollar.
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In February, India and Singapore announced that they would be linking their UPI and PayNow digital payment systems to enable instant and low-cost fund transfers between the two economies, which transact more than $1 billion each year.
Eight banks from Singapore and India, including DBS, Liquid Group, Axis Bank and State Bank of India were participating in the collaboration at launch. The integration enabled Indian users to remit up to 60,000 Indian rupees per day, the Reserve Bank of India said.
The PayNow-UPI linkage was the world's first real-time payment systems linkage to use a scalable cloud-based infrastructure capable of accommodating future increases in the volume of remittance traffic.
