India’s Unified Payments Interface (UPI) has transformed digital payments and has brought many advancements in online payment. Now, in an exciting update, NRIs can use UPI for transfers in India without fees, adding ease and cost savings for those with connections with the people in India. This option allows NRIs to avoid typical fees for international money transfers, making it easier to support loved ones, pay service providers, and manage finances in India.
Why UPI Matters for NRIs
UPI was initially designed for Indian residents, creating a seamless digital platform for interbank and person-to-person payments. Given its massive success, it has been now extended to NRIs, bringing ease and efficiency to cross-border transactions that was not available so far. The integration allows NRIs to make transfers, shop online, pay bills, and send funds to family members in India, without incurring any charges.
For NRIs who frequently send money to India, this can save significant cost. Typical wire transfers or money remittance services often charge processing fees, exchange rate markups, or even recipient fees, which can be big with many transactions. With UPI, NRIs can make instant payments in Indian Rupees (INR) from their NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts, skipping these fees and delivering funds directly to the recipient’s account without delays.
How NRIs Can Access and Use UPI for Fee-Free Transactions
1. Linking an NRE or NRO Account to UPI
To use UPI as an NRI, you need either an NRE or NRO account. Here’s a quick breakdown of these accounts:
- NRE Account: Primarily used for depositing foreign earnings in India. The principal and interest in an NRE account are both fully repatriable, meaning funds can be transferred back to your country of residence without restrictions. Additionally, interest earned in an NRE account is tax-free in India.
- NRO Account: Used for managing income generated within India, such as rent, dividends, or pensions. Funds in an NRO account are not fully repatriable, and interest earned here is liable to Indian taxes.
Both accounts can be linked to UPI, allowing NRIs to transact in INR with ease. This feature is particularly useful for those who want the flexibility to pay bills or family expenses in India directly from their overseas income or from income generated within India.
2. Setting up UPI with an Indian Mobile Number
To activate UPI on your account, an Indian mobile number linked to your NRE or NRO account is required. Most major banks allow this setup, enabling NRIs to receive an OTP (one-time password) on their registered Indian mobile number when transacting through UPI.
Here’s a step-by-step overview of the setup process:
- Download a UPI-Compatible App: Choose a UPI-enabled app, such as Google Pay or PhonePe. Each of these apps has its features but supports seamless payments across the UPI network.
- Register Your Mobile Number: Use your Indian mobile number during the setup. The app will verify your mobile number by sending an OTP.
- Link Your NRE/NRO Account: Once your mobile number is verified, link your NRE or NRO bank account. Some banks may have specific requirements for linking NRE or NRO accounts to UPI, so check with your bank for any additional steps.
- Create a UPI ID and Set a PIN: You will then create a UPI ID (typically your mobile number followed by your bank’s domain, e.g., [mobile]@bankname) and set a secure UPI PIN to authorize payments.
3. Making Transactions with Ease
Once your UPI ID is active, you’re ready to begin. With just your UPI ID, you can send money instantly to any other UPI ID in India, whether it’s for family support, bill payments, or shopping online. Recipients receive the funds immediately in their bank accounts, making UPI a quick and cost-saving alternative to bank transfers.
Benefits of Using UPI
The benefits of UPI are much more than cost savings. UPI brings convenience to NRIs, allowing them to become a part of India’s digital economy without international transfer restrictions. Here are the benefits:
- Real-Time Transactions: Traditional international transfers can take days, but with UPI, payments happen within seconds, giving both NRIs and recipients in India instant access to funds.
- Secure Transfers: UPI is highly secured because it requires multi-factor authentication with a PIN for each transaction. This ensures that transactions remain secure even across borders.
- Compatibility with many Indian Services: UPI is widely accepted in India—from grocery stores to e-commerce platforms to utility providers. For NRIs, this means they can pay for a lot of services directly through UPI, saving them the stress of managing separate payment methods.
- No Currency Conversion Fees: Because UPI transactions from an NRE or NRO account are conducted in INR, there’s no need for currency conversion fees, which can reduce the amount of international remittances.
- Better Control: Many NRIs have family members in India who depend on their financial support. UPI allows NRIs to transfer funds quickly and easily by transferring exact amounts without any fees and charges.
Eligibility Criteria for NRIs
Although UPI’s fee-free structure is very attractive, there are some eligibility requirements and considerations for NRIs to keep in mind:
- NRE/NRO Accounts: Ensure your account is properly set up and that your bank allows UPI transactions from NRE/NRO accounts.
- Indian Mobile Number: An Indian mobile number is required, which means NRIs may need to keep an active Indian SIM card, even when living abroad. Some NRIs prefer using dual-SIM phones to manage both local and Indian numbers.
- Bank Policies and Regulations: While most major Indian banks support UPI for NRE/NRO accounts, there can be transaction limits or other restrictions, particularly on large transfers. Check with your bank on any such limitations.
Conclusion
With UPI’s new feature, NRIs will be able to transfer funds without any charges, which has given them a new level of convenience when transacting in India. This option empowers NRIs to transfer funds quickly, conveniently and without charges. The ability to send funds instantly to loved ones or to pay for services simplifies life for NRIs.
For NRIs, UPI offers not just a method of payment but also a symbol of freedom where seamless transactions cross the distance of countries. If you’re an NRI, consider using UPI as part of your transactions in India. And if you need any help or guidance with setting up the same, connect with us and we will be happy to help.
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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. SBNRI does not intend to predict future returns, please read all related documents before investing.
Frequently Asked Questions
Can NRIs use UPI without an Indian mobile number?
No, an Indian mobile number is required for UPI transactions, as OTPs are sent to this number for verification and security. Some NRIs may prefer dual-SIM phones to manage both their local and Indian numbers.
How does UPI compare to traditional international transfer services for NRIs?
Unlike traditional services, UPI transactions are fee-free, instant, and conducted in INR, removing currency conversion fees. This offers NRIs a fast, cost-effective, and convenient way to send money within India.
What types of transactions can NRIs perform using UPI?
NRIs can use UPI to send money to family, pay bills, shop online, and transfer funds instantly within India, making it suitable for both personal and family-related expenses.
