In recent years, there has been growing discussion on “digital public infrastructures” (DPIs), systems such as identity, alternative payment methods, and data exchanges that are backed by governments through ownership, operation, or through direct or indirect control or support. DPIs are often aimed to promote financial inclusion across the society. One central element in the DPI revolution is government-backed fast payment systems (FPS) that enable instant transfers between bank accounts on a specific payment rail. There are now four dozen FPS systems in the world; some prominent examples of government-backed FPS include India’s Unified Payments Interface (UPI) and Brazil’s Pix. These payment systems have generated a great deal of interest around the developing world and the development community as a means to promote financial inclusion.
However, the analysis of FPS’ inclusion gains and other benefits is still nascent. FPS have typically been analyzed in a case study format, without comparisons to each other — when there are many types of FPS and not all FPs are government-led, but rather, like Sweden’s Swish and UK’s Fast Payments, led by the private sector or, like Thailand’s PromptPay, co-led by the public and private sectors. In addition, FPS is only one potential payment system to promote outcomes governments are interested in, such as digital payments use, access to finance, and cross border trade – comparisons to other models are required to assess the relative contributions of FPS on these elements.
The purpose of this brief supported by the Mastercard Policy Center for the Digital Economy is to promote data-driven, policy-relevant discussion on the impacts of different types of FPS and other payment systems on inclusive development. The paper explores various types of data to start shedding light on the role of FPS on consumers and small and medium enterprises’ (SMEs) digital payments use, access to finance, and participation in trade; raises questions for future research, and provides recommendations to policymakers interested in building FPS.