The approximately 3.5 million NRIs in the UAE make up the largest expatriate community in the country. The progressive rollout of the digital Unified Payments Interface (UPI) system in the UAE is aimed at serving this key demographic of NRIs, as well as Indian tourists, with quick and cost-effective transactions. A complex, digitally engineered system implemented at scale of course also comes with potential hiccups from time to time. Here we’ll explore some of the key features and benefits of UPI payments in the UAE, and also some common issues one might face with them.

What is the Unified Payments Interface (UPI)?

UPI is a real-time payment system that allows instant funds transfer between bank accounts via smartphones. The success of the UPI system, launched by NPCI in 2016, has positioned India as a global leader in digital payments innovation.

Current UPI Landscape in the UAE

The UAE government’s great initiative to support fintech innovations has played a key role in adopting and expanding UPI services in the UAE. UAE banks are increasingly partnering with Indian payment platforms to integrate UPI into their systems. This collaboration is aimed at providing seamless and efficient payment solutions.

The National Payments Corporation of India (NPCI) has collaborated with UAE banks, such as Mashreq Bank, and financial institutions to introduce UPI to ease cross-border payments. NPCI’s collaboration with Network International in the UAE has also enabled UPI payments across the country through its network of over 2 lakh POS terminals across 60,000+ merchant locations.

Continuous innovations and developments in the UPI framework, along with further expansion plans, are expected to make it an even more robust and versatile payment solution.

How to Use UPI Payments in the UAE?

Follow these steps to use UPI payments in the UAE:

  • Install UPI-compatible apps such as PhonePe, Google Pay, etc.
  • Register and set up an account with a mobile number and link it to your NRI bank account in India.
  • Complete the verification process using the OTP received.
  • Set a UPI PIN for transaction authorization. This PIN will be required every time you make a transaction.
  • You can use UPI apps to pay merchants by scanning a QR code, sending money to India using the recipient’s UPI ID and receiving money by sharing your QR code or UPI ID. Some banks also allow cross-border remittances from the UAE to India.

UPI vs traditional payment methods in the UAE

Cash, bank transfer, and credit card/debit cards are the commonly used payment methods in the UAE. UPI can offer some key benefits over these modes of payment.

One key benefit is that it is space saving. It does not require you to carry any separate payment instrument, such as cash or cards, or even your wallet. As long as you have your smartphone, that’s all you need. An important behavioural shift brought about by the digital revolution of the last decade is that we never forget to carry our phones, even though we may forget/misplace our wallets.

The built-in default multi-factor authentication through PIN and OTP makes this a highly secure form of payment. Many international credit and debit cards lag far behind in adoption of this key fraud prevention feature.

The daily and per-transaction payment limits on UPI mean that you can’t use them for making large payments. But it is adequately suited to most day-to-day transactions such as groceries, home electronics and appliances, etc.

Common issues with UPI payments in the UAE and how to solve them

1. Verification failure

You may not receive the SMS to verify the account. Ensure that you link your mobile number to the bank account and have international SMS enabled. Some banks may also allow you to link your UAE number to your NRE/NRO bank account.

2. Poor connectivity and application compatibility

Poor network connectivity and application compatibility may disrupt transactions. Ensure your device has a good WiFi or mobile data connection and your apps are updated to the latest versions.

3. Incorrect UPI PIN

You can reset your UPI PIN through the app using the ‘Forgot PIN’ option. Make sure to remember your new PIN.

4. Acceptance at merchant locations

Since UPI payments are not yet available to all merchants in the UAE, it’s important to confirm with the merchant whether their bank network supports UPI payments.

5. Cross-border transaction issues

Cross-border payments through UPI apps in the UAE are presently limited. Verify that the participating banks support UPI. Check for any cross-border restrictions or additional fees.

Conclusion

Since its introduction in 2022, the UPI landscape in the UAE has seen growing adoption, increasing integration, and supportive regulatory frameworks. UPI payments in the UAE offer a secure, convenient, and cost-effective way for NRIs and Indian tourists to manage their financial transactions.