On July 13, 2023, India signed an agreement with France during Prime Minister Narendra Modi's state visit to allow UPI payments in that country. It will enable Indian tourists to make transactions in rupees.
Unified Payments Interface (UPI) is a popular mobile-based payment system that allows people in India to make round-the-clock payments through a virtual payment address created by the customer. The announcement comes after the National Payments Corporation Of India (NPCI), the umbrella organisation offering UPI services, signed a memorandum of understanding (MoU) with France's online payment system, Lyra, in 2022.
How It Will Benefit Travellers
Indian tourists can now transact in rupees effortlessly through the local QR codes or UPI IDs, eliminating the need to carry foreign currency. It provides flexibility and allows tourists to spend according to their requirements instead of purchasing fixed amounts of foreign exchange.
UPI's Journey Across The Globe
UPI has expanded its global reach by partnering with Singapore, Bhutan, Nepal, the UAE, and France for cross-border transactions. France is the latest addition to the growing list.
Savings on Foreign Exchange Markup Charges
International payments made with credit or debit cards often come with foreign exchange markup charges that can reach up to 3.5 per cent of the transaction amount, depending on the card features. While certain banks and fintech companies offer forex cards with lower markup fees than credit cards, UPI rupee payments can help travellers save more. It is because the transaction will happen in rupees that does not require foreign currency conversion.
Under the Foreign Exchange Management Act (FEMA), travel-related expenses fall within the Liberalized Remittance Scheme (LRS) limits. As a result, Tax Credited at Source (TCS) provisions will apply as per the norm. International debit cards, prepaid forex cards, and direct foreign exchange purchases are subject to TCS, but credit card spending is exempt. But as all establishments do not accept credit cards, carrying a small amount of cash is helpful. However, this necessity will change now with the advent of the UPI payment system in France.
