New Delhi, September 03: The Indian government has stalled a proposal from China’s Alipay to integrate with the Unified Payments Interface (UPI), a report by Reuters said. With heightened national security concerns and unresolved questions regarding the storage and management of sensitive customer data, this move is aimed at shielding India’s digital financial ecosystem from external risks, especially from China. As the UPI system expands internationally, Indian regulators are increasingly prioritizing its digital security and localization over cross-border integration with specific foreign payment providers.
The integration, proposed by Alipay’s Singapore-based parent Ant International in January, would have allowed Indian travelers to use UPI at merchants signed up to Alipay+ abroad, while allowing Chinese travelers to do the same in India.
Indian law enforcement agencies have raised concerns about money laundering risks and the potential for data breaches, reflected by the Reserve Bank of India’s 2018 rule requiring all payment data to be stored within India. The entire cross-border payment system has been built over this, and a global data flow tied to Chinese ownership, like Alipay, does not sit well with this rule.
Indian authorities have consistently deepened scrutiny to companies with Chinese roots, driven by ongoing geopolitical tensions and border disputes between the two countries. Since 2020, India has banned hundreds of Chinese-linked apps and restricted Chinese investments into Indian companies.
