With UPI’s global buzz, India proves that it can be a digital trailblazer

India has often emphasised on the significance of an immaculate digital public infrastructure that could contribute to a more inclusive, democratised and progressive world.  Digital Public Infrastructure could, primarily, be understood as a technologically driven ecosystem enabled by the government, which in turn empowers the government to ensure an efficient and effective delivery of key public services through digital means.

Digital Public Infrastructure or as it is commonly referred to colloquially – the “Indian Stack” lies at the intersection of technology, market and governance, thus enabling remarkable innovation and palpable change across different realms. Aadhaar, DigiLocker and Unified Payment Interface (UPI) are some of the supreme examples of India’s Digital Public Infrastructure services.

In the past, countries in Africa and SouthEast Asia have shown profound interest in adopting  India’s robust biometric system. This year, it was during a G20 meeting in February where Prime Minister Narendra Modi emphatically expressed his interest in sharing India’s success story in the shape of Unified Payments  Interface (UPI) with the world.

Bhutan, in 2021, became the first country to adopt UPI standards on QR Code. Similarly, Nepal is the first country to have adopted the India-led UPI way of making hassle-free digital transactions. If Nepal responds to the transition in the manner the Indian markets did, then, a world of opportunities await National Payments Corporations of India (NPCI) to make a mark – more so in the Indian subcontinent.

The Payments Revolution

It is riveting to observe that a technology introduced nearly seven years ago, has been able to leave such a huge impression on the Indian economic system. UPI has already undermined credit and debit cards in India.

Such is the success of UPI in India that it is forecasted that by 2026, 1.12 percent of India’s GDP will be boosted by UPI payment. Increasingly,
countries around the globe are expressing their willingness to adopt UPI like technologies, considering its ease of use and interoperability.

UPI’s success has truly ushered in a slew of opportunities for private and public partnership. Prior to the advent of UPI, it was essentially the private players who were usually successful in making breakthroughs in the fintech ecosystem.

When UPI Crosses Borders

Having tasted continued success at the home turf, the government now looks to breach the territorial limits restraining the inherent potency of UPI. As NPCI looks to venture into the uncharted waters, the foremost priority must be to widen the scope to engage Indians outside of India and allow them to pay for goods and services through the homegrown platform.

To make the most out of it, NPCI must persuade Indian tourists’ most preferred destination countries like Australia, the US, Thailand, Malaysia and Switzerland  to adopt UPI. After India and Singapore linked their national payments system earlier this  year, NPCI is actively planning to make UPI available in a string of Gulf countries.

UPI’s global acceptance is set to have an overwhelming impact on “cross-border transactions”. India is the recipient of the largest chunk of remittances in the world.  Hence, the government must look to engage with countries which inhibit the Indian diaspora sending the most money back home. Correspondingly, two countries namely the United Arab Emirates and Singapore feature high on the list.

In April 2023, the International Monetary Fund (IMF) recognised the lessons learned from  India's digital journey, highlighting the country's achievements and best practices in a  working paper titled “Stacking up the Benefits: Lessons from India's Digital Journey”. It serves as a testament to the position India is in to lead the world on the digital frontier.

Jai Prakash is a former Officer on Special Duty to the Minister of State for Planning (NITI Aayog). Tanush Handa has engaged with various government authorities on public policy matters and is Assistant Manager, Ardent Co. Views are personal, and do not represent the stand of this publication.