Learning from Brazil and India’s Instant Payment Systems

M-RCBG Associate Working Paper No. 254

Learning from Brazil and India’s Instant Payment Systems

Polina Kempinsky

2025 Policy Analysis Exercise prepared for The Atlantic Council
 
Prepared by: Polina Kempinsky, MPP 2025
Prepared for: Ananya Kumar, The Atlantic Council
Faculty Advisor: Professor Timothy Massad
Seminar Leader: Professor John Haigh

April 2025, Paper: "Over the past decade, India and Brazil have launched instant payment systems (UPI and Pix, respectively), achieving national scale and transforming the payment landscapes of both countries. With 350 million UPI users1 and 140 million Pix users,2 approximately 25% of India’s population and about 65% of Brazil’s population utilize these systems. In global terms, one in every 11 adults worldwide uses either Pix or UPI to send or receive instant payments.3 Brazil’s instant payments policy is relatively narrow, focused specifically on payments (over a more general financial services/identity offering), with the Brazilian Central Bank (BCB) owning Pix and pushing it forward in cooperation with domestic market players. Pix was launched in 2020, following a two-year ideation and development period, becoming the world’s fastest-growing payment method.4 India’s UPI is part of a broad Digital Public Infrastructure."

Executive Summary

This PAE addresses the question, “What can be learned from Brazil and India’s instant payment systems for other countries aiming to introduce similar systems?”. It does so by reviewing the systems in both countries and creating a guidebook for policymaking, focusing on organizational decisions.

The background for this work is the successful implementation of instant payment systems in Brazil and India – Pix and UPI, respectively. These systems have enhanced financial inclusion, driven fintech growth, and become the dominant payment method in their countries. However, their implementation has also led to challenges, such as increased fraud and a disruption of the power balance between traditional financial institutions and newly emerged players, such as fintechs and payment system providers. The guidebook for policymakers includes recommendations for three planning and implementation stages:

1.Pre-requisites for the system – the need for a state-initiated system: India and Brazil have greatly benefitted from governmental payments innovation. Learning from their experience, the need for such systems can be derived from three factors. First, such systems are most relevant for states with a low prevalence of other types of payment methods, such as debit and credit cards or mobile network-based payments. Second, the cost and time to develop must be considered and weighted against the potential benefit from the process, and the potential alternatives emerging during the development. Lastly, states should assess their ability to execute and enforce market participation, ensuring that state efforts pay off.

2. Getting ready to hit the ground – assessment of current and future market dynamics: Brazil and India diverge in how their payment systems have influenced respective markets. Brazil’s antitrust landscape, central bank ownership, strong fintech ecosystem, and the choice to introduce merchant fees have supported the growth of domestic fintechs and neobanks. India’s decision to develop its system outside the central bank, openness to international players, and the creation of a no-fee system have facilitated the entrance of large multinationals. Both countries have seen accelerated growth in credit card usage driven by the introduction of new user cohorts into the market. States considering the implementation of such systems can leverage this accumulated knowledge for their own system design.

3. Setting up the process – mapping unintended consequences and developing engagement mechanisms: with the decision to set up the systems comes the need to set up the mechanics to engage relevant stakeholders in design, development and implementation, as well as to plan for unintended consequences. Both systems have mechanisms to conduct consultations on various topics, such as system development, governance, fraud, etc. Based on these experiences, this paper outlines proposed approaches for planning for unintended consequences across each stage of the process and engaging stakeholders.