Five New Payments Solutions Announced at G20 Summit

According to the World Bank , "deployment of the cost-saving digital means to reach currently financially excluded and underserved populations with a range of formal financial services suited to their needs that are responsibly delivered at a cost affordable for customers and sustainable for providers" is what is meant by "digital financial inclusion." In this policy brief, we examine digital literacy and finance from the standpoint of G20 nations. 

 

Financial inclusion and Literacy Online:

 

An eye on the emerging market economy In developing nations, 71% of adults hold financial accounts, according to the Global Findex Survey 2023 by the World Bank . These accounts were held at a bank or a regulated organization, like a credit union, a microfinance organization, or a company that offers mobile money services. 

 

From 51% of individuals in 2011, the percentage of adults worldwide who hold accounts grew. From 63% of people in developing nations in 2017, the proportion of adults who hold accounts climbed by 8 percentage points. 13 of the G20 nations, of which only four are emerging markets, have account ownership rates exceeding 80% .

 

Digitized Access

 

The foundation of digital financial inclusion is access. Digital access has been measured using a variety of measures, including the percentage of internet users and mobile phone ownership. Between rich and developing nations, there remains a gap in the number of internet users, albeit it narrowed somewhat in 2021 (International Telecommunication Union 2021). Statistics on internet use are skewed in favor of men, young people, and people living in cities in both developed and developing countries. For developing economies, these variations are more pronounced. 

 

It is noteworthy that industrialized economies have progressed further than developing economies in achieving gender parity in internet usage, with the former having done so. After a little decline in 2020, mobile cellular subscriptions increased in 2021 (with Africa displaying a reverse trend). The trend for mobile broadband subscriptions was comparable. For 29 nations in 2018–20, the ownership rate of mobile phones exceeded 90%.
 

An eye on the emerging market economy In developing nations, 71% of adults hold financial accounts, according to the Global Findex Survey 2023 by the World Bank . These accounts were held at a bank or a regulated organization, like a credit union, a microfinance organization, or a company that offers mobile money services. From 51% of individuals in 2011, the percentage of adults worldwide who hold accounts grew. From 63% of people in developing nations in 2017, the proportion of adults who hold accounts climbed by 8 percentage points. 13 countries, only four of which are emerging markets, have account ownership rates in the G20 countries that are above 80%.

 

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G20's Contribution to Digital Financial Inclusion

 

The Global Partnership for Financial Inclusion (GPFI), a forum for G20 member nations, interested non-G20 countries, and pertinent stakeholders like the World Bank and the Organization for Cooperation and Development (OECD), has provided direction for the G20's activities in the area of financial inclusion. The first G20 Financial Inclusion Action Plan (FIAP), which was approved at the G20 meeting in Seoul that year (GPFI 2020), required the establishment of the GPFI.

 

The FIAP has since undergone updates in 2014, 2017, and 2020. Given that financial inclusion can help achieve a number of UN SDGs, the 2017 G20 FIAP provided direction for the GPFI's efforts to be in accordance with the 2030 Agenda for Sustainable Development. 

 

It is also linked to the new financial inclusion opportunities and difficulties brought on by the trend of digitization. To encourage the development of ethical and cutting-edge digital technologies, the GPFI also created policy guidelines in the 2020 High-Level Policy Guidelines for Digital Financial Inclusion for Youth, Women, and SMEs and the three associated publications.

 

The 2020 G20 FIAP gives digital financial inclusion and SME finance top priority, keeping with the Leaders' directive in the Buenos Aires Declaration that the GPFI should streamline its work program and structure. This is why the 2020G20 FIAP concentrates on three problems that GPFI members see as being of the utmost importance: 
 

i) the GPFI's overarching objectives

ii) the action areas under the two priority subjects

iii) cross-cutting issues and topics that should be included in all of the GPFI's activity.

 

UPI-Driven Transformation

 

The World Bank also recognized India's skillful application of technology for UPI-enabled retail payments and direct benefit transfers to individuals. According to the report, the DPI in India has decreased complexity, costs, and time related to commercial activities in the nation while simultaneously enhancing efficiency for private enterprises.

 

The nation's smartphone-based quick payment system, known as Unified purchases Interface (UPI), has become incredibly popular for retail digital purchases. It is becoming a pillar of India's digital financial environment as usage is accelerating.
 

What's more, the Indian government has been eager to spread the advantages of UPI outside of its boundaries. Sri Lanka, France, the United Arab Emirates, Singapore, and other nations have collaborated with India to examine cutting-edge fintech and payment technologies.

 

UPI Credit Line

 

By enabling pre-approved credit lines from banks via UPI, this innovative solution will revolutionize client access to credit and promote a more efficient and digital banking ecosystem. This will hasten the process of obtaining credit lines, promoting economic development.

 

UPI LITE

 

As a result of this functionality, users may now initiate and complete transactions even in locations with inadequate connectivity, such as underground stations, distant areas, etc. Users can now send and receive money both offline and in both directions.

 

Tap & Pay UPI

 

The RBI governor also introduced UPI Tap & Pay in an effort to increase the usage of Near Field Communication and QR code technologies. Users now have the option to pay by simply tapping NFC-enabled QR codes at merchant locations, in addition to the traditional scan and pay approach.

 

Hello! Conversational Payments on UPI

 

By enabling users to conduct voice-enabled UPI payments through UPI apps, telecom calls, and IoT devices in Hindi and English—and soon in a number of additional regional languages—conversational UPI payments will improve user experience. Users only need to speak orders to transfer money, followed by their UPI PIN, to complete the transaction.

 

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Conversational Bill Payments Using BillPay Connect

 

A nationalized number is now available for bill payments across India thanks to BillPay. Customers may now easily retrieve and pay their bills on the chat app by texting a simple "Hi." Additionally, clients will be able to pay their bills by making a missed call if they don't have cellphones or immediate mobile data connection.

 

The World Bank's G20 Global Partnership for Financial Inclusion document has praised the transformative effects of India's Digital Public Infrastructure (DPI) during the past ten years.

 

It claimed that India accomplished what would have taken almost fifty years in just six short years. The World Bank also made the following points:
 

• The JAM Trinity has increased the percentage of adults who have access to financial services from 25% in 2008 to over 80% during the past six years.
   
• By June 2022, the number of PMJDY accounts has tripled from 147.2 million in March 2015.
   
• Over 260 million, or 56% of these PMJDY accounts, are owned by women.
   
• Using DPI, India has created one of the largest digital G2P architectures in the world.
   
• The entire amount of UPI transactions during the fiscal year 2022–2023 was close to 50% of India's nominal GDP.

 

Fintech Payments, Crowdfunding, and Borrowing

 

Financial institutions are using technology more and more to offer customers new goods and services. This has been made feasible by fintech, which is the term for digital technologies that "modify...existing business models, applications, processes, and products" (Ehrentraud, Ocampo, and Vega 2020). Web, mobile, cloud, machine learning, digital ID, and application programming interfaces are a few examples. Fintech is a term that has been used to describe innovative digital financial services in practice.

 

 By providing services to previously underserved customers (such as those in rural areas), these new internet channels increase financial inclusion by operating more affordably than old ones for the same risks. Consumers have the option of borrowing money from a typical bank, a non-bank financial institution, or even online or through electronic channels. Since borrowers and lenders are connected through crowdfunding platforms, these channels can also be used to raise money as equity loans or crowdsourced loans (Ehrentraud, Ocampo, and Vega 2020).

 

Payment using UPI for G20 countries

 

The implementation of UPI for foreign travel, beginning with G20 members, has been announced by RBI during the MPC meeting. Three banks, two non-bank PPI issuers, and three international airports will offer it. The Finance Minister had previously stated that 338 banks are now operational on the UPI platform and that the NPCI is expanding UPI internationally and assisting nations in the creation of payment systems. "Countries like Singapore, Bhutan, and France are interested in India's payment systems," she had stated.

 

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How will it function?

 

According to the RBI, Pine Labs Private Limited and Transcorp International Limited would provide UPI linked wallets to qualified travelers at certain international airports.

 

Travelers to India can now enjoy the simplicity of UPI payments at more than five crore merchant locations that allow UPI transactions based on QR codes. India leads the world in real-time transaction volume, which is three times that of China, the closest competitor.

 

The two main pillars supporting the expansion of UPI are a user-friendly interface and a minimal interface. UPI-PayNow, a cross-border payment system, was launched jointly by India and Singapore. Prime Minister Narendra Modi and his Singaporean colleague Lee Hsien Loong attended the launch.

 

Financial Education and Literacy in G20 Developing Economies

 

The project for financial education known as the Aprender Valor Program has been undertaken in Brazil. Early in 2020, Brazil likewise quickly enacted a program to promote financial and digital literacy. The Banking Association South Africa has implemented the financial education initiatives "Teach Children to Save" and "StarSaver" in South Africa, with an emphasis on the younger population. The Financial Sector Conduct Authority's "My Life, My Money" consumer education website is the focus of a program in South Africa as well (Reserve Bank of India 2021).

 

Initiatives that concentrate on disseminating financial information and offering aid in financial concerns utilizing the Bank of Russia's mobile app "CB online" are underway in G20 developing market economies such as the Russian Federation. The National Strategy for Financial Education is being implemented in India, and the government has established institutions for promoting financial education and financial literacy.

 

The PRC State Council's nationwide Action strategy for Scientific Literacy 2021–2035 (Reserve Bank of India 2021) is a nationwide strategy in the PRC that has a broader objective of promoting scientific literacy.

 

Conclusion

 

The G20 Summit's announcement of payment solutions is an important step toward the worldwide advancement of digital financial systems. These solutions seek to promote global collaboration while enhancing financial inclusion, security, and efficiency. They have the potential to change the way payments are made and financial services are provided in the future, helping people and companies all around the world.