India has stalled Alipay+'s proposal to connect with India's Unified Payments Interface (UPI) real-time payment system for cross-border transactions, following concerns from government agencies regarding data security and money laundering risks. According to Reuters, the Indian government's concerns stem from its Chinese links, data-security risks and the potential misuse of customer data. India's foreign ministry cited "political grounds" as the reason to stall the proposal, with one source noting there was no clear path to clearing the hurdles that stand in its way. The latest reports confirm that national security concerns in New Delhi and questions about the storage and use of customer data have been the key factors driving the decision. Indian law enforcement agencies have raised concerns about potential money-laundering risks and the threat of data breaches that could expose customers to cyberfraud, according to two sources familiar with the discussions.
The proposal, made by Alipay+ in January, was the first by a China-linked entity in India's financial services sector and came against the backdrop of easing tensions between the two neighbours. As reported by Reuters, the proposal was made during a period of improved bilateral relations, with Chinese President Xi Jinping's expected visit to attend a BRICS summit in New Delhi later this month being viewed as an effort to stabilise bilateral relations. Alipay+ is operated by Singapore-based Ant International, a digital payments and fintech firm that was spun out of China's Ant Group as an independent company in 2024. The proposal would have allowed Indian tourists in China, Hong Kong and other parts of Asia to make payments at more than 150 million merchants in Alipay+'s network, with the second phase enabling international visitors to use Alipay+ in India. The restrictions on Chinese investments were imposed following clashes along the India-China border in 2020, which severely strained relations between the two countries.
According to Reuters, India's financial services sector remains closely guarded, even after the country eased some restrictions on Chinese companies in March. A third source indicated that national security concerns have clouded the decision-making process, despite the benefits that a link between Alipay+ and UPI could bring to cross-border payments. The scrutiny is significantly higher for China-linked entities compared to other bilateral cross-border payment programmes, with checks including how transaction data is processed, stored and managed, and processes for dispute resolution. As per Reuters, these checks are part of the standard procedures for all bilateral cross-border payment programmes, but the scrutiny is notably higher for China-linked entities. India's ministries of external affairs, finance, home affairs, the Reserve Bank of India, the National Payments Corporation of India and Ant International did not respond to requests for comment regarding the stalled proposal.
Countries in Asia are actively linking their existing payment systems to cut costs and enable faster cross-border payments. As reported by Reuters, the market size for outbound cross-border payments from the Asia-Pacific region is expected to reach $23.8 trillion by 2032, nearly doubling from 2024, according to data provider FXC Intelligence. The proposal to link Alipay+ with UPI comes as the two payment systems seek to broaden their regional partnerships in countries like Malaysia, the Philippines, South Korea, Singapore and France. The third source said national security concerns have clouded the decision-making process, despite the benefits that a link between Alipay+ and UPI could bring to cross-border payments, reflecting the ongoing security concerns despite improved diplomatic relations.
