Diffusion of Digital Payments in India: A Tale of Two Technologies

Higher productivity resulting from better technology can be achieved only with widespread diffusion. In a developing country context, the decision to support one or a few among a gamut of technologies is not an easy one for the policymaker. Using the experience of two digital technologies—card payments and Unified Payments Interface from India—this article intends to provide some pointers in this direction. We use the functions of the innovation systems approach to argue that if the cost of adoption and cost of use are reduced, then the technology diffuses faster. This implies that innovation systems that ensure lower costs tend to be more successful and hence policy should support those functions within innovation systems that lower costs.