Growing Retail Digital Payments: The Value of Interoperability

Fintech Notes, June 25, 2025

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Purpose: Examine whether interoperability can help increase the uptake of retail digital payment systems.
Central claim: Interoperability can support the adoption of digital payments by increasing users’ freedom to choose their favorite app.
Empirical focus: Uses granular data covering the universe of transactions on India’s Unified Payments Interface (UPI), described as an interoperable platform that has become the world’s largest retail fast payment system by volume.

Mechanism described: Interoperability increases users’ freedom to choose their favorite app, which in turn supports adoption of digital payments.
Key terms preserved from source: interoperability, closed-loop payment system, networks, app transaction value, payment transaction, transaction volume, UPI transaction value overtime.

Data scope: Universe of transactions on India’s Unified Payments Interface (UPI).
Empirical conclusion: Evidence is consistent with the conceptual framework—interoperability has supported adoption of digital payments.

Interoperability is associated with increased adoption of retail digital payments.
India’s UPI serves as a large-scale example where an interoperable platform has become the world’s largest retail fast payment system by volume.

Promoting interoperability could be a promising policy lever for countries seeking to transition away from cash.
Policymakers aiming to increase uptake of retail digital payment systems should consider interoperability as part of their strategy.

Growing Retail Digital Payments: The Value of Interoperability
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