Digital payment systems in emerging economies: Lessons from Kenya, India, Brazil, and Peru

Abstract

Digitalization of retail payments has facilitated financial inclusion. This is recognized to stimulate growth, alleviate poverty, and address gender disparities in the financial sector. This paper closely examines four prominent payment solutions in the developing world, namely M-Pesa in Kenya, UPI in India, Pix in Brazil, and Yape in Peru. These payment systems differ enough in their key characteristics to draw useful lessons from their successful implementation. We employ a descriptive approach based on a three-dimensional conceptual framework that emphasizes the role played by payment service providers, the role played by regulators and central banks, and the degree of payment system interoperability. We then attempt to make this framework operational by suggesting a way to quantitatively represent the four payment systems examined. While these varied experiences demonstrate that there is no one-size-fits-all solution, they highlight the necessity of active public-private sector cooperation and placing the end user at the center of such initiatives.