In a landmark development for international finance, India and the European Union have officially begun work on connecting their instant payment systems. The Reserve Bank of India and NPCI International Payments Limited are spearheading the integration of India's Unified Payments Interface (UPI) with the European Union's TARGET Instant Payment Settlement (TIPS) system.
What This Historic Partnership Means
This collaboration represents one of UPI's first major partnerships outside Asia and marks the most significant payments partnership between two central banks to date. The announcement came on November 21, when the RBI confirmed it had been engaging with the European Central Bank and both institutions agreed to commence the realization phase of linking UPI and TIPS.
The integration aims to transform cross-border payments by making them faster, cheaper, and more efficient for both retail and commercial transactions. This partnership is expected to pave the way for increased cross-border collaboration and create numerous new use cases for digital payments.
Understanding the TIPS System
TIPS, launched by Eurosystem in November 2018, serves as the monetary authority for eurozone countries, including the European Central Bank and national central banks of euro-using nations. As of April 2025, TIPS settles payments in euro, Swedish kronor, and Danish kroner. The system continues to expand, with Norges Bank (Norway's central bank) preparing to join and Iceland expressing interest in participation.
Pavan Kumar, Chief Product and Delivery Officer at Network People Services Technologies Ltd, highlighted the significance of this linkage: "The linkage would bring together two high-performance payment systems – UPI, which offers secure, real-time account-to-account payments at population scale, and TIPS, which provides instant settlement in central bank money and uses ISO 20022 native messaging standards."
How This Partnership Differs From Previous UPI Expansions
This collaboration stands apart from NPCI International's previous tie-ups in several crucial aspects. This marks UPI's first major partnership outside the Asia-Pacific region and covers multiple countries simultaneously, unlike earlier agreements that were limited to specific countries or led by private companies operating in particular segments.
Rahul Jain, CFO at NTT Data Payment Services India, emphasized the scale of this partnership: "Here, you are aligning at the level of the central bank system. That is a much broader base compared with a tie-up with an individual country. This is very different because a central bank defines everything, including policy procedures and how the payment ecosystem must work."
Rohit Mahajan, Founder and Managing Partner at Plutos ONE, pointed out structural differences: "TIPS is designed to reach numerous SEPA (Single Euro Payments Area) market participants. Therefore, TIPS participants have far more diversity regarding banks, regulatory frameworks, and currencies," noting that participating in TIPS presents vastly higher operational complexity and total opportunity size.
Challenges and Timeline for Implementation
The integration faces several significant challenges stemming from differing regulatory environments, risk frameworks, and messaging systems. Key obstacles include varying know-your-customer (KYC) procedures, anti-money laundering (AML) rules, sanctions screening, chargebacks, dispute management, and settlement cycles across jurisdictions.
Prashanth Ramdas, Partner at Khaitan & Co, explained technical differences: "TIPS operates on a settlement-in-central-bank-money model, where payment service providers must maintain dedicated cash accounts with their national central bank. UPI, conversely, operates through NPCI as a central switch connecting participating banks, with settlement occurring through designated settlement banks in commercial bank money."
The two systems also use different messaging standards, with TIPS being ISO 20022 compliant and imposing specific standards including a maximum execution time of 10 seconds, while UPI uses proprietary protocols developed by NPCI. Additional challenges include identity resolution differences, real-time foreign exchange conversion between rupee and euro, settlement times across different time zones, and forex exposure management.
The integration is being managed by Nexus Global Payments, a non-profit organization with experience linking instant payment systems for the Bank of Malaysia, Monetary Authority of Singapore, Bank of Thailand, and RBI.
Experts predict varying timelines for completion, with some suggesting legal arrangements could take two to three months. Optimistic projections indicate the inter-linking might be completed in six months to a year, given that bilateral agreements are fast-tracked when governments and central banks are aligned. However, more conservative estimates suggest the process could take up to three years.
Expected Benefits and New Use Cases
The UPI-TIPS linkage is expected to unlock numerous benefits beyond traditional remittances. Real-time, low-friction money transfers between India and other jurisdictions would significantly boost exporters, creators, and the digital small-business economy.
Akash Sinha, CEO and Co-founder of Cashfree Payments, highlighted the timing: "The India-EU corridor is already rich with payment demands from students, remote workers, exporters and families, creating a need for simpler and more intuitive cross-border flows. If the experience mirrors the ease of domestic UPI, adoption will accelerate quickly, and businesses will be the early beneficiaries."
Potential use cases include QR-code-based merchant payments for Indians travelling to Europe, faster euro-denominated receipts, improved reconciliation, reduced friction for exporters and freelancers, education and commercial payments including tuition fees, travel bookings, and business billing. Instant low-value B2B transactions are expected to ease cash-flow pressures and enhance operational efficiency for small businesses.
Prashanth Ramdas cited tangible benefits already observed: "UPI's adoption in France has reportedly contributed to a 40% increase in Indian tourist arrivals at places such as the Eiffel Tower," adding that successful adoption may also result in significant cost benefits since traditional remittance costs average 3-5% for many cross-border payment corridors, while UPI linkages typically operate at significantly lower costs.
NTT Data's Jain provided transaction volume context: "The volume of transactions on UPI International is estimated to be around 600,000 in 2024, given that cross-border transactions have so far been restricted to small countries in Asia-Pacific. This year, the projected number looks to be 1.2 million transactions, which is almost double compared with last year."
UPI's Current Global Footprint
The RBI has been actively pursuing interlinking of UPI with fast payment systems in other countries as part of the G20 roadmap to promote cheaper and more efficient cross-border payments. Recent expansions include partnerships with Singapore's PayNow, UAE, Nepal, Bhutan, France, Mauritius, and Sri Lanka.
Notable recent developments include NPCI International's July 2025 tie-up with the Department of Posts to enable secure remittances from the global Indian diaspora, partnership with Singapore-based PayPal Network Pte, and bilateral deals with UAE. Subsequent collaborations with Qatar National Bank, Japanese fintech firms Netstars and NTT Data, and Bahrain's Benefit Company have further expanded UPI's global reach.
NPCI International continues discussions with other central banks and fintech firms across Asia, Africa, and Europe, signaling that the TIPS partnership represents just the beginning of UPI's global expansion strategy.
