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Building Public Digital Infrastructure for the Next Century: The Case of India's UPI

New Paper: Published by Konrad Adenauer Stiftung Singapore and Digital Asia Hub

Authors: Titiksha Vashist and Shyam Krishnakumar





Research Paper: Key Takeaways

  • India is expected to clock the fastest growth in the digital payments sector between 2019 and 2023, with a compounded annual growth of 20.2 percent. India’s Unified Payments Interface (UPI) is a real-time payments system that allows users to instantly transfer funds between bank accounts though a mobile application. With 200 banks live on a single platform, and multiple private service providers, it has fostered a diverse and innovative fintech ecosystem.

  • The UPI can be seen as a case of a GovTech innovation that puts the user at the centre, designs for safety in transactions, and allows multiple private players to build on top of a public, regulated platform. The UPI is a part of the larger “India Stack”, a family of APIs, open standards, and infrastructure components. The digital payments architecture of the NPCI is designed to include users without internet access, coupling the *99# mobile SMS system with the UPI to make payments. The UPI has helped bridge a critical internet access gap and helped increase the ambit of financial services to rural India.

  • In 2019, UPI went global, launching in Singapore, and is ready to expand across Asia and Africa. At the same time, UPI poses policy challenges given its mandate. Issues such as the government’s Zero-Merchant Discount Rate Policy, lack of public accountability of its key governing body (the NPCI), and fintech companies’ access to financial data in the absence of a legal framework for data protection in India are causes for concern.

  • UPI’s overwhelming popularity, owing to apps developed by tech giants like Google and Facebook, also raises concerns about an emerging Google-Facebook duopoly, lack of risk management processes and resilience of financial ecosystems dependent on big private entities.



Read the full paper published by Konrad Adenauer Stiftung here.