India's global DPI proposal faces resistance from developed nations

Amid fear of losses for Visa and Mastercard, developed countries have flagged that an interoperable global DPI may affect private players

India’s proposal to formalise an interoperable global Digital Public Infrastructure (DPI) framework in the G20 leaders’ communique is facing pushback from some developed countries, which argue the move may impede the growth of global private payment processors. This is even as more countries are accepting the National Payments Corporation of India (NPCI)-developed Unified Payments Interface.
 

After integrating with Singapore’s payment system this March, India last week signed agreements with the United Arab Emirates (UAE) and France to expand the footprint of UPI beyond its shores.  Though no recent data is available about the market share of UPI and American private payment networks, such as Visa and Mastercard, then finance minister Arun Jaitley in a 2018 blog post had stated that both American companies were losing market share in India to the indigenously developed payment systems of UPI and RuPay, the share of which has “reached 65 per cent of the payments done through debit and credit cards”.
 

“There needs to be a recognition that digital public infrastructure needs to be public. But there also does need to be room for the private sector,” said a G20 official familiar with the US delegation’s view, when asked whether the loss of market share by Visa and Mastercard to UPI was a cause of concern in view of India’s global DPI proposal.

Asked whether there was a consensus on India’s proposal to make DPI interoperable, India’s G20 Sherpa Amitabh Kant in an interview with Business Standard said interoperability is ingrained in the DPI, though the extent of interoperability is up to the country concerned. “The attempt through the Digital Economy Working Group is to see if the G20 can agree to a suggested framework for DPI. What constitutes DPI? As nations gain more confidence in the effectiveness of DPI, it would result in greater cross-border data flows, and as a corollary interoperability is made possible,” he added.

On whether there is pushback from some countries to India’s DPI proposal as the move may adversely impact their private players, Kant said private players play a leading role in India’s UPI. “If you look at our experience with digital payments through UPI, it’s private players, such as PhonePe, Google, and Paytm, that have built payment solutions. Even the underlying layer of UPI has been built through a public-private partnership. So, there is most certainly a big role to be played by the private sector in DPI,” he said.

Global DPI is one of the key priorities during India’s G20 Presidency. India showcased its success story on DPI at the Kumarakom Sherpa meet in March, highlighting key DPIs developed by India for addressing crucial issues, such as digital identity, financial inclusion, and equitable access to education and health. Various population-scale DPIs of India Stack, such as Aadhaar, Co-Win, UPI, DigiLocker, and BHASHINI were showcased in the experience zone.

Issues regarding privacy, data governance, and intellectual property rights appear to be the key concerns of the US. In the joint statement during Prime Minister Narendra Modi’s state visit to the US in June, both sides said they recognise the potential of DPI approaches for enabling open and inclusive digital economies and intend to work together to provide global leadership for the implementation of DPI to promote inclusive development, competitive markets, and protect individual rights. “In this regard, the United States and India will explore how to partner together and align our efforts to advance the development and deployment of robust DPIs, including appropriate safeguards to protect, privacy, data security, and intellectual property. They will explore developing a US-India Global Digital Development Partnership, which would bring together technology and resources from both countries to enable development and deployment of DPIs in developing countries,” it added.