India continues to stand out amongst emerging economies with its unique market-wide approach to enhancing digital payments and financial inclusion. February saw the launch of the Bharat QR Code, an interoperable low cost acceptance solution developed by National Payments Corporation of India (NPCI), MasterCard and Visa. This move followed the Reserve Bank of India’s guidance given in its Payments Vision 2018, that outlined innovation, interoperability, and security as the three pillars to facilitate India’s transition to a less–cash society.
As Ignacio Mas, Executive Director of Digital Frontiers Institute, notes,(MicroSave, February 2017) the ultimate aim of the government and regulator is to create a “ubiquitous, low-cost network”, and this is being done by leveraging scale and network effects at the market-level.He has listed some key issues that need to be addressed at the current juncture, which need more attention in public discourse:
• In such an interoperable model, where every player can potentially benefit from the actions of other players, will there be sufficient incentives for the deployment of an effective cash in/cash out network – which remains the toughest nut to crack in any digital money network?
• As entities linked to government take on the role of delivering more and more component elements of the digital financial services value chain (e.g. UIDAI, NPCI, CCA, NeGD), what is the right governance model under which they should operate, to ensure that they remain focused on the public interest and not just in promoting their own organizational agendas?
• As the competitive environment becomes complex, will the authorities be able to keep on top of market practices and ensure that the regulatory framework remains pro-competitive?
• As more of people´s data is digitized, there will inevitably be strong commercial pressures for people to share more and more data in order to be able to access advanced digital services. Beyond the usual privacy protection concerns, how can we place limits on how much data customers have to give up as the price of digital inclusion?