PAYMENTS INFRASTRUCTURE AND ECONOMIC EFFICENCY IN A DIGITAL AGE: WHAT CAN BE LEARNED FROM THE UPI APPROACH FOR CENTRAL ASIA

The increased digitalization of financial systems, as experienced in recent times, necessitates efficient, secure, and more integrated payment systems, especially in the cash-intensive economy of Central Asia. The article will use the Indian experience of the Unified Payments Interface (UPI) as a best practice example of integrating digital payment systems to make the economy more efficient. The article will use the Structural Equation Model (SEM) of analyzing the Indian experience of the UPI in making the economy more efficient by empirically testing the relationship between the use of the UPI, financial efficiency, financial inclusivity, trust, and economic performance. The article finds that the adoption of the UPI by the Indian economy results in a positive effect on financial efficiency, which in turn enhances financial inclusivity by the mediatory role of financial stability and trust in the Indian economy. The results clearly show the capability of interoperable digital payment systems to minimize transaction costs and expedite payments. Based on the Indian example, the paper illustrates lessons to be drawn for the context of the Central Asian region. A crucial role here can be played by a centralized and regulatorily supported payment system.