THE SITUATION
The Reserve Bank of India (RBI) and NPCI International (NIPL) formally entered the “realisation phase” of linking India’s UPI with the Eurosystem’s TARGET Instant Payment Settlement (TIPS) on November 21, 2025.
This moves beyond previous merchant-acceptance partnerships (like Worldline) to full system-level interlinking. The agreement connects the rails directly: UPI’s 400M+ daily transactions merge with TIPS’s pan-European settlement engine.
The structural shift is immediate: the India-Europe corridor moves from correspondent banking (SWIFT) to direct real-time settlement. This explicitly targets the G20 goal of reducing cross-border remittance costs from ~6% to <1%.
WHY IT MATTERS
- For Money Transfer Operators (Wise, Western Union): Pricing power collapses by 2027. You cannot charge 6%—or even 0.6%—when the central bank rails settle instantly for near-zero marginal cost.
- For European Fintechs: Integration complexity drops 90%. A single connection to TIPS now provides addressable access to 300M+ active UPI users without bilateral agreements.
- For Indian Exporters: Working capital cycles accelerate from T+3 to T+0. Payment finality becomes instant, eliminating the liquidity drag of cross-border settlement buffers.
BY THE NUMBERS
- Remittance Cost: Global average ~6.2% per $200; G20 target is <1% (Source: World Bank/BIS).
- Market Volume: Global cross-border payments hit $195 trillion in 2024 (Source: FXC Intelligence).
- UPI Scale: ~400 million daily transactions; 93 billion transactions in 2H 2024 alone (Source: Worldline India).
- TIPS Scale: Settles 43 million daily transactions with 500+ transactions per second capacity (Source: Banca d’Italia).
- Remittance Flow: India receives ~$125B annually, a significant portion from the Eurozone (Source: World Bank Data).
COMPANY CONTEXT
NPCI launched NIPL in 2020 with a specific mandate: export India’s sovereign payments stack. Early wins were merchant-focused (QR codes in France, Singapore, UAE).
This TIPS linkage is the strategic pivot. It validates the “Project Nexus” model: connecting domestic Fast Payment Systems (FPS) rather than building new proprietary networks. The ECB is the most significant partner to date, effectively creating a state-backed alternative to the SWIFT network for retail value transfer.
Competitors like Swift have responded with “Swift Go,” but they remain fundamentally message-based, not settlement-based. NIPL is building a settlement layer.
COMPETITOR LANDSCAPE
SWIFT (The Incumbent): Relies on correspondent banking. High fees ($15-50), slow settlement (1-3 days), and opaque FX spreads. The UPI-TIPS link eliminates the intermediaries that generate these fees.
Wise/Remitly (The Fintechs): Their moat is “pre-funded liquidity” to simulate speed. They hold cash in both countries to settle instantly. System-level interlinking (UPI-TIPS) commoditizes this moat—banks won’t need Wise’s liquidity pools if they can settle directly on TIPS.
Crypto/Stablecoins: The “remittance” use case for stablecoins (USDC/USDT) weakens significantly in this corridor. Regulated, instant fiat rails negate the speed/cost advantage of crypto without the regulatory risk.
INDUSTRY ANALYSIS
The era of “rail arbitrage” is ending. For two decades, fintechs built value by masking the inefficiencies of legacy banking rails. The RBI and ECB just fixed the rails.
This creates a bifurcation in value. Capital flows will move away from pure transaction processors (who charge for movement) toward “workflow” platforms (who charge for compliance, invoicing, and reconciliation).
Public sentiment among central bankers has shifted from “monitoring” fintechs to “competing” with them. As noted by the BIS Innovation Hub, connecting domestic IPS (Instant Payment Systems) is now the primary strategy to counter private closed loops (like stablecoins).
FOR FOUNDERS
- If you are building a remittance app: Pivot to B2B workflow automation within 12 months. The “spread” on consumer remittances will compress to zero. Value shifts to reconciling the payment with the invoice, not moving the money.
- If you are a European SaaS founder: Integrate TIPS-based payments immediately upon API availability (likely Q3 2026). You can now bill Indian clients via UPI auto-pay (e-mandates) without credit card network fees (3%).
- If you are in RegTech: Demand for automated cross-border KYC/AML will triple. Real-time payments fail if compliance checks take days. Build the “instant compliance” layer that matches the instant settlement layer.
FOR INVESTORS
- For payments portfolios: Short the pure-play money transfer operators (MTOs). Their unit economics depend on FX spreads that central bank linkages explicitly aim to eliminate.
- For B2B fintech thesis: Invest in “orchestration layers.” The complexity is no longer moving money, but routing it intelligently between these new corridors (UPI-TIPS, UPI-PayNow, Nexus).
- Signal to watch: Watch for the first European bank to offer “Zero-Fee India Transfer” to capture deposits. This signals the commoditization has officially begun.
THE COUNTERARGUMENT
The counterargument: Technical linkage does not guarantee liquidity or compliance speed.
The “realisation phase” is engineering, but the bottleneck is policy. European banks are terrified of AML (Anti-Money Laundering) risks. Even if UPI and TIPS talk in milliseconds, a transaction might hang for 24 hours in a bank’s compliance queue. If rejection rates on cross-border UPI payments exceed 5%, users will revert to Wise/SWIFT for reliability.
This interpretation holds true if the ECB and RBI fail to harmonize “pre-validated” KYC standards. Without shared trust frameworks, the pipe is fast, but the gates remain closed.
BOTTOM LINE
The “Internet of Payments” just got its transatlantic cable. Remittance fees are dead revenue; the business model of charging 6% to move bits is over. Founders must build value on why the money is moving, not that it is moving.
