India Stalls Alipay+ Proposal to Link with UPI Over Security Concerns

Alipay+'s proposal to link with India's instant payments system for cross-border transactions has been stalled due to national security concerns in New Delhi and questions about the storage and use of customer data, three sources familiar with the discussions said.

The proposal, made by Alipay+ in January, was the first by a China-linked entity in the financial services sector and came against the backdrop of easing tensions between the two neighbours, which had a deadly border clash in 2020.

New Delhi and Beijing are working on maintaining peace at the border and Chinese President Xi Jinping's expected visit to attend a BRICS summit in New Delhi later this month has been viewed as an effort to stabilise bilateral relations.

The Indian government's concerns about Alipay+'s proposal stem from its Chinese links, data-security risks and the potential misuse of customer data, the three sources said. The sources requested anonymity because the discussions are confidential. Reuters is reporting for the first time the Indian government's views on the matter.

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.

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.

'POLITICAL GROUNDS'

Alipay+ proposed linking with India's instant payments system, the Unified Payments Interface (UPI), to allow Indian travellers in China, Hong Kong and other parts of Asia to make payments at more than 150 million merchants in its network, Reuters reported at the time. The second phase of the proposal would have allowed international visitors to use Alipay+ in India.

India's foreign ministry cited "political grounds" as the reason to stall the proposal, one of the three sources said, adding that there was no clear path to clearing the hurdles that stand in its way.

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 of the sources.

A third source said how transaction data is processed, stored and managed, and processes for dispute resolution are part of the checks made for all bilateral cross-border payment programmes, but the scrutiny is significantly higher for China-linked entities.

India's financial services sector remains closely guarded, one of the sources said, even after the country eased some restrictions on Chinese companies in March.

The restrictions on Chinese investments were put in place after the 2020 border clash.

LINKING REGIONAL PAYMENT SYSTEMS

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.

Countries in Asia, in an effort to cut costs and enable faster cross-border payments, have lately been linking their existing payment systems.

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 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.