‘Deep Pockets’ Vs. ‘Long Pockets’ in DPI: What Instant Payments and Open Finance Tell Us About Sustainable Funding for Digital Public Infrastructure

Why It Matters

Without durable cost‑allocation frameworks, DPI projects risk under‑funding, higher fees, or loss of trust, undermining financial inclusion and the broader digital economy.

Key Takeaways

• Upfront DPI costs are modest; long‑term operational expenses dominate
• Pricing policies, participation mandates, and governance are the three sustainability levers
• Hybrid and cross‑subsidized models balance adoption speed with cost recovery
• Regulators must adopt tariff‑style oversight to ensure equitable, adaptable funding

Pulse Analysis

Digital public infrastructure has exploded worldwide, with over 120 instant‑payment systems live by 2025 and close to 100 jurisdictions committing to open‑finance frameworks. While the capital outlay to design and launch these platforms often runs in the low‑single‑digit‑million‑dollar range—tiny compared with a major Indian bank’s multi‑hundred‑million‑dollar IT budget—the real expense lies in the ongoing operational tail. Continuous capacity upgrades, fraud detection, regulatory oversight, and the addition of new use cases generate a cost stream that grows with transaction volume, making long‑term financing the decisive factor for sustainability.

Three policy levers shape how that tail is funded: pricing rules, participation mandates, and governance structures. Zero‑price models, often backed by government subsidies, can jump‑start adoption but may favor large incumbents able to cross‑subsidize. Cost‑recovery approaches shift the burden to participants or end‑users, risking exclusion of smaller players. Hybrid schemes—free person‑to‑person transfers below a threshold, merchant fees above, or free basic data APIs with paid premium analytics—seek a middle ground. The convergence of payments and data exchange enables cross‑subsidization, where revenues from one service underwrite the other, creating a more resilient ecosystem.

Regulators, however, must evolve from traditional risk‑focused oversight to tariff‑style governance akin to telecom or electricity sectors. Setting transparent, adaptable pricing frameworks ensures that costs are equitably spread as systems scale and new risks emerge. Such oversight may involve central banks mandating participation, competition authorities monitoring market power, or dedicated digital‑economy regulators overseeing rule changes. By embedding long‑term funding horizons, diversified revenue streams, and flexible pricing mechanisms, policymakers can safeguard DPI’s promise of inclusive, trustworthy digital services for the future.