Aimed at improving cross-border payments, this is one of the first major tie-ups for UPI outside Asia. It also marks the biggest payments partnership so far between two central banks, and is expected to pave the way for more cross-border collaboration, faster and cheaper international payments, and more use cases for both retail and commercial transactions.

Mint takes a closer look at what this inter-linking means for UPI and its users worldwide.

What is TIPS?

TIPS is a market infrastructure service, launched by Eurosystem in November 2018. Eurosystem is the monetary authority for eurozone countries and includes the European Central Bank (ECB) and national central banks of countries that use the euro. TIPS settles payments in the euro, Swedish kronor and Danish kroner as of April 2025. Norges Bank, the central bank of Norway, is also preparing to join the payments system, while Iceland has shown interest in joining.

On 21 November the RBI said it had been engaging with the ECB and that both sides had agreed to start the realisation phase of linking UPI and TIPS. They will collaborate on technical integration, risk management, settlement arrangements and design, liquidity considerations, message mapping, operational alignment, and participant certification, all of which are essential to connecting large payment ecosystems.

Pavan Kumar, chief product and delivery officer at Network People Services Technologies Ltd (NPST), an Indian fintech company that provides digital payment and banking solutions, said 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 is the TIPS linkage different from previous NPCI International tie-ups?

For one, TIPS is the first major tie-up for NPCI International outside the Asia-Pacific region. It will also cover several countries, unlike previous partnerships, which were led by private companies operating in certain segments in specific countries.

Rahul Jain, chief financial officer, NTT Data Payment Services India, said, “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, an Indian payment technology company, said this tie-up also has significant structural differences with previous ones. “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,” he said, adding that participating in TIPS presents vastly higher operational complexity and total opportunity size.

What are the major challenges and by when will the linking be completed?

Major challenges for UPI-TIPS inter-linkage stem from differing regulatory environments, risk frameworks and messaging systems. Know-your-customer (KYC) procedures, anti-money laundering (AML) rules, sanctions screening, chargebacks, dispute management, and settlement cycles in each jurisdiction present several challenges, Plutos ONE’s Mahajan said.

Prashanth Ramdas, partner at law firm Khaitan & Co, said, “TIPS operates on a settlement-in-central-bank-money model, in which payment service providers must maintain dedicated cash accounts with their national central bank. UPI, conversely, operates through NPCI (National Payments Corporation of India) as a central switch connecting participating banks, with settlement occurring through designated settlement banks in commercial bank money.” He added that the two systems also use different messaging standards, and that TIPS is ISO 20022 compliant and imposes specific standards including a maximum execution time of 10 seconds, while UPI uses proprietary protocols developed by NPCI.

“From a customer-facing perspective, identity resolution presents challenges. UPI relies on VPAs (virtual payment addresses) and mobile numbers linked to Indian banking KYC, while TIPS participants use IBAN (International Bank Account Number) as the primary identifier,” Ramdas said. Other challenges include real-time foreign exchange conversion between the rupee and euro at competitive rates with transparent pricing, settlement times across different time zones, and how participating institutions will manage their forex exposure, he added.

Typically, cross-border UPI tie-ups involve a multi-phase approach, starting with the signing of a memorandum of understanding (MoU), followed by technical integration. The subsequent phases include closed user testing, launching a limited pilot, and a full public rollout.

The integration of UPI and TIPS is being managed by Nexus Global Payments, a non-profit that aims to link instant payment systems around the world. The company has previously worked on fast payment systems for the Bank of Malaysia, Monetary Authority of Singapore, the Bank of Thailand, and the RBI.

Experts said it would take two to three months for the legal arrangements and agreements to fall into place. Some said that because bilateral agreements are fast-tracked, especially when the governments and central banks are aligned, the inter-linking may be completed in six months to a year. However, others believe it could take up to three years.

What new use cases are expected to emerge from this tie-up?

Real-time, low-friction money transfers between India and other jurisdictions would deliver a significant boost to exporters, creators and the digital small-business economy. It would increase the speed and efficiency of cross-border payments and thus elevate the payment experience, said Akash Sinha, chief executive officer and co-founder of Cashfree Payments, an Indian payment and banking technology company.

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, he said. “The timing is ideal. If the experience mirrors the ease of domestic UPI, adoption will accelerate quickly, and businesses will be the early beneficiaries,” Sinha added.

NPST’s Kumar said, “We anticipate that the UPI-TIPS corridor is expected to unlock benefits beyond traditional remittances”, and cited potential use cases such as QR-code-based merchant payments for Indians travelling to Europe, faster euro-denominated receipts, improved reconciliation, reduced friction for exporters and freelancers, and education and commercial payments including tuition fees, travel bookings and business billing. He also expects instant low-value B2B transactions to ease cash-flow pressures and enhance operational efficiency for small businesses.

UPI’s adoption in France has reportedly contributed to a 40% increase in Indian tourist arrivals at places such as the Eiffel Tower, Ramdas of Khaitan & Co said, adding that UPI’s acceptance in France has delivered tangible commercial benefits both for that that country and the Indian diaspora and tourists. “Successful adoption may also result in significant cost benefits. Traditional remittance costs an average of 3-5% for many cross-border payment corridors. UPI linkages typically operate at significantly lower costs,” he said.

NTT Data’s Jain said 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. “As of now, remittances haven’t even started. It’s still only retail payments – both online and offline. This year, the projected number looks to be 1.2 million transactions, which is almost double compared with last year.”

Where is UPI currently available outside India?

The RBI has been actively pursuing interlinking of UPI with fast payment systems in other countries to promote cheaper and more efficient cross-border payments. The goal is to make transactions more transparent and accessible, while maintaining high levels of compliance, data integrity, and operational resilience in accordance with the G20 roadmap.

In July 2025, NPCI International tied up with the Department of Posts to enable secure and affordable remittances to India from the Indian diaspora worldwide. This included partnering with Singapore-based PayPal Network Pte to expand the use of UPI across Paypal’s global network, and signing bi-lateral deals with United Arab Emirates (UAE), a major source of remittances to India.

In September, NPIL collaborated with Qatar National Bank (QNB) and Japanese fintech firm Netstars’ payments system StarPay to enable UPI payments for QNB merchants. In October, another Japanese fintech firm NTT Data and Indian payments firm Razorpay tied up with NPCI International to enable UPI payments for Indian travellers in Japan and Malaysia. This was followed by a tie-up between Bahraini financial transactions company Benefit and NPCI International in November to enable real-time cross-border remittances between India and Bahrain.

Before that, NPCI International had tied up with Singapore’s PayNow – its first major international partnership – to facilitate cross-border payments between India and Singapore. Nepal and Bhutan have also adopted UPI for money transfers, and Indian tourists in France, Mauritius and Sri Lanka can pay via UPI at specific high-footfall merchants, restaurants and tourist destinations. The company is also in talks with other central banks and fintech firms across Asia, Africa, and Europe.