Neither DPI hype nor false modesty serves our interests

livemint.com:

₹2,400. While all the arguments so far suggest that India massaged the truth to its benefit, the main thrust of the piece is that the India achieved its success through “gratuitous acts of coercion." This, the article suggests, ought not to have been the case—that we should have, instead, allowed the free play of market forces. It is this top-down approach—this “unnecessary paternalism"—that it comes down hardest on.

It makes a number of arguments in support of this position. In the context of UPI, it points to two mandatory stipulations—the fact that no fees can be charged for UPI transactions and that businesses with more than ₹500 million in annual sales are obliged to accept UPI payments at all their establishments—as evidence of things that ought to be have been done differently. It argues that thanks to these measures, innovation in the payments space has been stifled—particularly when compared to other countries whose payment systems (Brazil’s Pix in particular) have been free to operate without similar coercive constraints.

In the first place, there is no evidence that these “paternalistic" stipulations have slowed down innovation. New features are constantly being added to the digital payments ecosystem—just last month, 4 new UPI features were launched (including Hello UPI, the voice-payment feature that will significantly extend the reach of the digital payments ecosystem). This does not look like an ecosystem that has stopped innovating.