India Stalls Alipay+ Proposal to Link With UPI Over China Security, Data Concerns

India has stalled a proposal by Alipay+ to connect with the country’s instant payments network, Unified Payments Interface (UPI), over national security concerns and questions about how customer and transaction data would be processed and stored, according to three people familiar with the discussions cited by Reuters.

The decision, once again, brings to the fore the continuing sensitivity around Chinese involvement in India’s financial services sector, even as New Delhi and Beijing seek to stabilize relations following years of diplomatic and economic tensions.

Alipay+, operated by Singapore-based Ant International, submitted the proposal in January. It would have been the first initiative by a China-linked company in India’s financial services sector since New Delhi imposed tighter restrictions on Chinese investment following the deadly 2020 border clash between the two countries.

The proposal comes at a potentially significant moment in bilateral relations. India and China have been working to maintain peace along their disputed border, while Chinese President Xi Jinping is expected to visit New Delhi later this month for a BRICS summit, an event that could provide another opportunity for the two governments to improve ties.

India’s concerns over the Alipay+ proposal are linked to the company’s Chinese origins, potential data-security vulnerabilities and the possibility that customer information could be misused, the sources said.

Alipay+ proposed linking its payments network with UPI so that Indian travelers visiting China, Hong Kong and other Asian markets could use their domestic payment accounts at more than 150 million merchants within the Alipay+ network, Reuters reported when the proposal was first made.

A second phase would have allowed foreign visitors to India to use Alipay+ at merchants connected to UPI.

One of the sources said India’s foreign ministry had cited “political grounds” for putting the proposal on hold and that there was currently no clear route to resolving the objections.

Indian law enforcement agencies have also raised concerns over potential money-laundering risks and the possibility that data breaches could expose users to cyberfraud, two of the sources said.

The scrutiny goes beyond the basic question of whether payments can be processed securely.

Authorities are examining how transaction information would be handled, where it would be stored, who would have access to it and how disputes would be resolved, according to one of the sources. Such checks are standard for cross-border payment arrangements, but the review is considerably more stringent when a Chinese-linked company is involved, the person said.

That makes data governance a central issue for any attempt to connect Alipay+ to UPI. Cross-border payment links require the exchange and processing of transaction information across jurisdictions, creating questions for regulators over data localization, access controls, cybersecurity and oversight.

India’s financial system remains particularly sensitive to these issues because UPI has become a core part of the country’s digital payments infrastructure.

Alipay+ is operated by Ant International, a Singapore-based digital payments and financial technology company that was separated from China’s Ant Group as an independent company in 2024.

Its Singapore corporate structure does not eliminate the political and regulatory concerns surrounding its Chinese origins.

India imposed tighter restrictions on Chinese investment after the 2020 border confrontation, when relations between the two countries deteriorated sharply. New Delhi eased some restrictions on Chinese companies in March as bilateral relations began to improve, but the financial sector remains closely guarded, one of the sources said.

The Alipay+ case shows the limits of that rapprochement.

For India, opening parts of its payments infrastructure to a China-linked company carries considerations that extend beyond commercial benefits. UPI is one of the country’s most important pieces of digital infrastructure, and the government has sought greater control over financial data and payment networks as digital transactions have expanded.

At the same time, a connection with Alipay+ could provide Indian travelers with a more seamless way to make payments abroad while potentially reducing dependence on cards and traditional cross-border payment channels.

The proposal also comes as UPI and Alipay+ pursue wider international expansion.

India has been promoting UPI as a global payments platform, establishing links or partnerships with payment systems in markets including Malaysia, the Philippines, South Korea, Singapore and France. The objective is to make cross-border payments faster and less expensive while increasing the international reach of India’s digital-payments infrastructure.

Alipay+ has pursued a similar strategy by connecting different national and regional payment systems to its merchant network.

The potential market is substantial. Outbound cross-border payments from the Asia-Pacific region are expected to reach $23.8 trillion by 2032, almost double their 2024 level, according to data provider FXC Intelligence. That growth is encouraging governments and payment companies to connect domestic instant-payment systems rather than relying exclusively on traditional card networks and correspondent banking arrangements.

However, analysts expect that India’s expanding UPI internationally must be balanced against control over critical financial infrastructure and sensitive customer information. The Alipay+ proposal therefore sits at the intersection of two competing priorities: India’s push to make UPI a globally connected payments platform and New Delhi’s determination to maintain strict oversight of Chinese-linked companies and financial data.

The third source said the national security concerns had complicated the decision even though an Alipay+-UPI connection could deliver significant benefits for cross-border payments.