Recentering User Needs in Digital Financial Infrastructures: The Global South Way

By Ava Haidar

, Louise Karczeski

and Nathan Paschoalini

CONTEXT OF G20 AND NEW LEADERSHIP

Through India’s G20 leadership in 2023, global agendas of digital transformation and financial growth have come to be intimately reoriented to challenges, priorities and special developments in the Global South. The deployment of these agendas through Digital Public Infrastructure (DPI) in particular have been given centre-stage, symbolising a new order of digital payments, open data systems and identity-verification technologies for developing around a digital citizenry. These technologies in incumbent (India) and incoming (Brazil) G20 leadership find particular resonance in their financial digital public infrastructures.

EXAMINING THE COMMON GROUND: DIGITAL PUBLIC PAYMENT INFRASTRUCTURE

With high adoption of robust payment infrastructures such as UPI and PIX, citizens in India and Brazil are becoming increasingly digital in their economic and financial dealings. Over 330 million Indians are registered on UPI after 7 years of operation, while PIX is utilised by over 140 million users in Brazil after 3 years of its creation. 

‘Interoperable’, ‘low-cost’, ‘convenient’ and ‘safe’ comprise the character of both these infrastructures, setting down a rhythm for digital financial payment principles of the Global South. At roughly 25% and 65% of their total country’s population respectively, these numbers represent sizeable growth in a few years time, making India and Brazil success stories in driving digital financial participation.

However, even with growing adoption and large-scale intention of these DPIs, the full realisation of a digital economy in these countries (and of other Global South territories) is impeded by challenges of affordability, literacy and socio-cultural factors. This calls into question not just the principles of the technology, but also how those principles translate on the ground. Considering the G20 as a key space for Global South engagement, this piece approaches digital financial infrastructures with a special focus on important aspects of the users’ experiences that could be considered for a Global South position and in the development of the G20’s digital strategy going forward. 

ACCESS REMAINS A SOCIAL MONOLITH

PIX is a testament to the popularity of demand around practicality, interoperability, agility and low-cost operation. However, trailing issues of connectivity and prevailing divides signal a closer look into the issues that translate into the history of the last mile’s adoption. Interestingly, even though internet access was publicly deployed as early as 1988, today there remains differential access due to uneven population distribution and economic differences. Additionally, the white population of Brazil avails at least 10% more access than black, multi-racial and other demographic groups. These differences point to the history of socio-economic and implementational exclusion that prevent particular groups from using DPIs meaningfully, more so after the destabilising impact of the pandemic. Older age groups and rural populations also have less access to the digital ecosystem, entrenching digital divides further. 

India faces similar challenges in digital access itself; the country accounts for “half of the world’s gendered digital divide.” Women comprise only a third of all Indian users on the internet, and even though a sizable number have access to it, their usage is shared, monitored or heavily prohibited by their socio-cultural norms. For instance, women’s free usage of phones is seen as immoral, or distracting, to their roles as mothers and wives. Thus, even when women are able to independently afford devices, they must hide their usage, or mask their movements through fake names online. 

In both countries, access to digital excludes large portions of already-marginalised communities from reaching digital financial progress in as meaningful a way that their citizen counterparts do. The obstacles to access are not just physical, but also rooted in cultural norms, historical social inequalities and geography, thus solidifying the financial inequalities that exist between dominant groups and minorities. Literacy and comfort are also factors that determine the line between passive and active forms of access to the interface of platforms itself.

SAFETY AND ACCOUNTABILITY REQUIRE MORE USER-LED APPROACHES

Given the size of participation and scale of data around large infrastructures like PIX and UPI, there are similarly greater risks and vulnerabilities around people’s financial information and mobility. In the Brazilian context, the use of Pix has raised concerns on data protection; five cases of leaks of the users’ data have been registered since its launch. Additionally, the infrastructure has been used to carry out financial scams and fraud, either by exploiting system vulnerabilities or through social engineering techniques, or sometimes a combination of both. In 2023, almost six thousand people were victims of one of the modalities of scams that use Pix, which uses a smartphone malware called Brats that enables the use of the automated transfer system (ATS). The victims of these schemes are usually vulnerable groups, such as the elderly, exacerbating the access challenges to digital inclusion. Similarly, in India, over 95000 cases of “UPI fraud” were registered in the previous year, where scammers posed as official authorities threatening suspension of their services, or fraudulent QR Codes/ UPI links are used to trick people into paying. 

Given a brief understanding of the current safety challenges in availing these DPIs, there are two broad areas of intervention: the first is accountability and protection, where people must not just have access to grievance redressal mechanisms in times of violation, but also transparency around digital infrastructures and harms around their usage. The centralisation of data in DPIs, while useful at a large level of analysis and deployment, possibly induces a vulnerability and threat to digital sovereignty. The second is people’s feeling of comfort and trust on DPIs; with lower levels of awareness and literacy, new users are more easily duped and taken advantage of on DPI platforms. This deters people who are opting into digital service perhaps for the first time, and who are otherwise also less digitally connected and conversant, expanding the access differences and digital divide earlier mentioned. As finance constitutes an important part of people’s wellbeing, experiencing harms creates distrust and a general discomfort around using digital services for essential needs, which must be treated with caution for the integration of citizens into DPIs. 

Hence, actualising the “public” in DPIs thus requires a stronger focus on aligning principles of creation, deployment and maintenance in technology in ways that account for the majority needs. What we observe in experiments of the Global South is the need to recenter the user’s socio-economic profile and feelings of trust and safety in DPI creation. 

BUILDING THE PATH TO INCLUSIVE FINANCIAL DPIS

Despite the challenges and concerns, the implementation of a financial digital public infrastructure, such as PIX and UPI, can serve the purpose of including people who are physically and otherwise excluded from the financial system. In this sense, as we project an inclusive future for the use of financial systems, and DPIs in general, the aforementioned problems must be taken into account so that the development of digital public financial infrastructures is guided by values that speak to the contemporary user’s needs. 

As the benefits of affordability and low-cost often don’t account for socially “inclusive” approaches, stakeholders must consider who is continued to be excluded from this infrastructure, and further embed measures to ensure they do not fall through the cracks of financial digitalisation. Be it through more awareness or social safeguards, people’s access to DPIs must be addressed outside of variables like cost.

People’s adoption is also centred around their willingness – user faith is a key element for the seamless functioning of institutions; when it comes to financial digital public infrastructure, user expectations around security standards must be met in explicit ways to guarantee the financial integrity of the user. It is important to identify the silent assets of trust, vulnerability and comfort around a population’s digital usage, which can help design incentives and desires around adoption of DPIs, ultimately leading to greater inclusion and application. 

Thus, foregrounding principles that might help guide stakeholders towards an affordable and inclusive financial future must focus on recentering the user through the following interventions:

• Responsibility: While transparency is a key part of engaging with any digital service, it is important that the governance of the digital financial infrastructure ties its responsibility to users through active transparency processes for its activities; this includes openness on risks with engagement, security breaches surrounding these systems and appropriate frictions (such as passwords and verifications) around people’s usage.
  
• Accessibility and Affordability: Accessibility must go beyond the usability conversation to the infrastructural needs of a population – it must account for lack of access to Internet and phones, or solve these issues through other innovations. For instance, the Central Bank of Brazil plans to tackle the connectivity issue by enabling offline transactions via Pix in the near future, paving the way for other financial inclusion policies. India’s UPI has this in place through UPI Lite X, allowing offline sending and receiving of money in remote locations through a simple dialing function.
  
• Trust and Protection: Infrastructures must be reliable and inspire the user’s trust, not just through honest and responsible design, but also through recognition of the harms that people are exposed to when they place their personal details in the technology. Financial security measures must work to ensure that people who are targeted by scams using tools such as Pix and UPI are not financially harmed.
  
• User-centric Design: Systems must be designed in a way that the user’s need and expectations come first – this includes a commitment to the baseline of usability. Infrastructures like UPI and PIX require only  QR Code-literacy, that is, a “digital language [that] can be developed for a verbal community”, accounting for a wider range of user ability than even simple digital text and iconography can. There must additionally be greater focus on populations that are generally left out of these infrastructures and scoping their visual and digital needs in design.