India sets sights on Africa for digital payment system development

India is making a significant push into Africa’s digital payments market, projected to reach $195.50 billion in 2024 and grow at a CAGR of 12.65% annually to reach $314.80 billion by 2028. This South Asian country plans to share its expertise in developing a digital payment system, specifically its Unified Payments Interface (UPI), with several African nations.

Following its launch by NPCI in 2016, UPI, a quasi-payment regulator under the central bank of India, has since become India’s most popular payment solution with more than 117 billion transactions in 2023, and finding relevance for payments transactions in about seven countries. The figure has again scaled up with a record transaction worth RS20.45 billion in May, 2024.

Confirming the development, Ritesh Shukla, CEO of NPCI International Payments Ltd. (NIPL), explained that the overseas arm of the National Payments Corporation of India (NPCI), a public non-profit organization for retail payment systems in India, is in discussion with a number of countries where an agreement is imminent with one of the stakeholders.

Unified Payment Interface is a real-time payment system developed by the NPCI which enables seamless transactions between banks and merchants, allowing users to make payments using their smartphones. Users can as well access multiple bank accounts, conduct fund transfers, and make merchant payments with a single mobile application and two-factor authentication.

With over 500 million registered users, more than 200 banks participating, a 50% plus market share in India’s digital payments and over 117 billion transactions, India’s UPI has already seen significant success in 2023. The country, through NPCI, now aims to replicate this success globally, starting with Africa and also, South America. 

However, this is not India’s first move in fostering a partnership with African countries on its UPI. In May 2024, Ghana partnered with India to implement UPI on its Ghana Interbank Payment and Settlement Systems (GHIPSS) within six months to facilitate low-cost, instant fund transfers. Few days later, the Bank of Namibia (BoN) signed an agreement with NIPL, an international arm regulator of NPCI, in a bid to develop a secure national payment system similar to India’s UPI. In Rwanda, decisions are underway to develop a UPI-like system.

In anticipation, UPI is likely to face fierce competition from already existing payment platforms in Africa like M-Pesa, a major digital payment platform in Kenya and Tanzania, which has been providing diverse mobile money services such as money transfers, savings, loans and bill payments. 

Flutterwave, a fintech digital platform which operates in more than 30 African countries, facilitates diaspora transactions between African countries and neighboring borders. Paystack, another fintech company in Nigeria, recently announced the launch of its Virtual Terminal in some African countries which includes Côte d’Ivoire, Ghana, Kenya, and South Africa.

With enhanced security features, signed intent for mandates and QR code-based transactions, UPI has revolutionized India’s digital payment landscape, and its global expansion aims to replicate this success.