Competition and financial inclusion: competing or complementing goals in DPI & interoperability
Competition and financial inclusion: competing or complementing goals in DPI & interoperability
- 45min
Interoperability in the payments ecosystem and the implementation of a digital public infrastructure (DPI) for digital payments have the potential of fostering two separate goals: market competition and financial inclusion. Nevertheless, depending on the authority advancing each measure and the legal mandate it has been entrusted with, those objectives could be regarded as competing (one is considered, and the other one is neglected) or complementing (both are taken into account, even though one might be more prevalent).
We analyze how these two targets are considered by antitrust authorities, the central bank, and other relevant authorities in Brazil, India, Peru and Chile. These countries from the Global South share a similar path in terms of legal measures adopted in the digital payments ecosystem consisting of voluntary/ mandatory interoperability. However, some differences also exist, such as the industry-led ownership of India's United Payments Interface (UPI), whereas the Brazilian DPI is owned by its central bank. Furthermore, the countries are at different stages of implementation. India is seen as a pioneer in the field with its UPI being launched in 2016, while Brazil’s PIX has been active since 2020. Peru’s Central Bank first ordered mandatory interoperability in payments in 2022, and this year reached an agreement with the international arm of the National Payments Corporation of Payments, which runs India's UPI, to deploy a similar system in Peru. Chile seems to be at the beginning of a long path, where the Supreme Court declared the mandatory nature of interoperability this year and the Commission for Financial Markets introduced new regulations on the matter, following intense discussions (some still pending) with competition authorities.
A number of actors play a role in pursuing the dual goals of furthering financial inclusion and market competition. This may include national competition authorities, central banks, government departments and industry associations. The institutional arrangements between these actors and coordination among them is paramount to providing predictability to all economic actors in the payment ecosystem and to the seamless attainment of the public interest goals of payment DPIs.
We analyze how these two targets are considered by antitrust authorities, the central bank, and other relevant authorities in Brazil, India, Peru and Chile. These countries from the Global South share a similar path in terms of legal measures adopted in the digital payments ecosystem consisting of voluntary/ mandatory interoperability. However, some differences also exist, such as the industry-led ownership of India's United Payments Interface (UPI), whereas the Brazilian DPI is owned by its central bank. Furthermore, the countries are at different stages of implementation. India is seen as a pioneer in the field with its UPI being launched in 2016, while Brazil’s PIX has been active since 2020. Peru’s Central Bank first ordered mandatory interoperability in payments in 2022, and this year reached an agreement with the international arm of the National Payments Corporation of Payments, which runs India's UPI, to deploy a similar system in Peru. Chile seems to be at the beginning of a long path, where the Supreme Court declared the mandatory nature of interoperability this year and the Commission for Financial Markets introduced new regulations on the matter, following intense discussions (some still pending) with competition authorities.
A number of actors play a role in pursuing the dual goals of furthering financial inclusion and market competition. This may include national competition authorities, central banks, government departments and industry associations. The institutional arrangements between these actors and coordination among them is paramount to providing predictability to all economic actors in the payment ecosystem and to the seamless attainment of the public interest goals of payment DPIs.
