Building DPI: Lessons Learned from Kazakhstan

Digital payments are a critical on-ramp for people around the world to access the increasingly digitized public and private services. In many countries, digital payment use has expanded rapidly over the past decade, especially in the wake of Covid-19, as consumers and businesses have migrated online and grown accustomed to the convenience, speed, security, and transparency of paying digitally. The mass adoption of digital payments has created powerful network effects that enable ubiquitous person-to-person transactions and dramatically expand markets for small businesses. The digital payment revolution has also helped create the fintech and e-commerce revolutions that fuel consumption and promote income growth.

Countries around the world have promoted digital payments and financial inclusion through various means, including through digital public infrastructures (DPIs)—a relatively new term usually referring to digital identity, payments, and data exchange systems on which other digital solutions and services can be built. In 2023, the G20—a group of twenty of the world’s largest economies that meets regularly to coordinate global policy on trade, economics, climate, and other policy issues—envisioned DPIs as “interoperable, open, and inclusive systems supported by technology to provide essential, society-wide, public and private services,” as playing “a critical role in accelerating digital transformation in an inclusive way.”

Estimates suggest that over 100 countries have at least one DPI element in place, and many further ones are considering DPIs. However, as discussed in a recent Scholl Chair report, there is still very little knowledge about DPI’s functioning and impacts, for example on digital payments adoption and use, financial inclusion, consumer choice, and economic productivity.

In addition, debate is still only beginning on the optimal DPI designs that would promote payment adoption and economic and inclusion gains. For example, while DPIs are often thought of as led by the government, empirically the degree of “public” in national digital identity and payment infrastructures varies widely across countries. Indeed, in many countries with broad-based adoption of digital payments, it is the private sector that has led the way in enabling payments and even digital identity systems, while the government has created an enabling environment for digitization and ensured competitive and open markets for all participants.

The purpose of this forthcoming Scholl Chair brief is to help bridge the knowledge gaps about DPI designs and impacts by highlighting Kazakhstan’s digital transformation journey. The Kazakh case merits attention: online banking users have risen from a quarter of the population in 2018 to nearly 100 percent in 2024, digital transactions have risen from only 7 percent of all transactions in 2014 to 89 percent today, and public services and government transfers and transactions are nearly fully digitized, with over 90 percent of the economically active population using the eGov platform. Its sophisticated e-government system has lifted Kazakhstan into the top 30 in the United Nations e-government index, with such economies as Estonia, Singapore, Sweden, and the United Kingdom.

Kazakhstan’s swift digital transformation has not been widely discussed, even if it offers valuable lessons to the many developing and emerging markets that are considering DPIs and contemplating the design of their digital transformation journeys. Much like in other rapidly digitizing emerging markets such as Turkey, Thailand, and Peru and advanced economies such as Sweden, Singapore, Estonia, and the United Kingdom, Kazakhstan’s rapid digital transformation journey is the product of intentional steps to build a customer-centric, open, and competitive digital economy.

In particular, the Kazah model highlights the importance of private sector leadership in digital transformation and public policies that promote competition and level playing fields. The government and the National Bank of Kazakhstan (NBK) have worked closely with the country’s banks and private sector to make strategic investments in digital and payment infrastructures and have developed regulatory frameworks and policies conducive to open and competitive payment markets.

The forthcoming Scholl Chair brief examines the policies and design choices that have contributed to Kazakhstan and many other countries’ success in digitizing payments and services. The main elements in these policy playbooks are listed below:

• Focus on the adoption of policies and regulations that have enabled an open, competitive, and innovative payment infrastructure conducive to consumer choice and convenience. The Kazakh approach is similar to that of four advanced economies with nearly universal use of digital payments—Estonia, Singapore, Sweden, and the United Kingdom. These countries also promote the inclusion of all market players in the payment system and competition in the payments market, an approach that provides users choice and flexibility at the point of purchase, fuels network effects, and facilitates cross-border transactions. These models contrast with Brazil’s Pix and India’s Unified Payments Interface, which are government-sponsored and curtail consumer choice of digital payments.
• Secure digital identity opening access to multiple public and private services. Kazakhstan has built biometrics-based digital IDs for users to navigate e-government services and safely make payments across the ecosystem. Almost all second-tier banks and a significant number of non-banking financial organizations, including 75 payment, microfinance, and other financial organizations, are connected to the digital biometric identification system.
• Public-private partnerships to promote digital transactions and e-government services and transfers, and ensuring private sector leadership to build sustainable, market-led solutions. For example, the government collaborates with private banks to integrate government services into bank’s super apps. Other governments that have been particularly successful at promoting digital payments have also cooperated closely with the private sector. For example, Sweden’s popular Swish mobile payment system was codeveloped through a partnership between major Swedish banks and the Riksbank, and the United Kingdom’s Faster Payments Service was created by a consortium of banks.
• Consumer protection and cybersecurity frameworks and mechanisms to monitor and address fraud in the financial system. As payments have been digitized and e-commerce has been mainstreamed into citizens’ daily lives, incidences of online fraud have increased. Kazakhstan has sought to prevent fraud through the 2022 central bank mandate for financial institutions to adopt cybersecurity protocols to protect sensitive financial data, and in August 2024, the central bank launched a new Anti-Fraud Center to promptly respond to fraudulent activities, block suspicious money transfers, and maintain a black list of suspicious mobile numbers.
• Promotion of financial innovation, for example through regulatory sandboxes and public sector co-investments in fintech and e-commerce players. As in many markets, the NBK’s regulatory sandbox is aimed at increasing the flexibility of financial market regulation and introducing new financial products. The government-sponsored incubator Astana Hub currently supports more than 1,500 technology companies, many of them fintechs, and research and development partnerships with global companies. The government has also promoted venture capital into startups and scaleups through a 2018 law that paved the way for the establishment of public angel investment entities.
• Investments in internet connectivity and duty-free access to devices to create network effects and ensure remote and underserved populations access digital payment systems and e-government services. In Kazakhstan, 92 percent of the population has been connected to the internet, over a landmass of more than a million square miles. Over 90 percent of people over 15 years of age have a mobile phone and mobile broadband has expanded to cover 89 percent. Today, mobile operators are working to expand 5G coverage in Astana, Almaty, Shymkent, and regional centers to finalize the 5G mobile communications rollout by the end of 2025.
• Large-scale educational campaigns to promote the adoption and use of digital payments and identity systems. Kazakhstan has pursued several financial and digital literacy campaigns to promote digital payments. For example, in 2020, the government approved a plan for improving financial literacy for 2020–2024, aligned with the recommendations of the Organization for Economic Cooperation and Development.

This policy playbook has been echoed in the G20’s 2023 position paper on DPIs which emphasized three elements for DPI development: enabling financial and digital infrastructures, such as mobile penetration and broadband connectivity; ancillary government support systems, such as government-to-person digital payments; and conducive legal and regulatory frameworks, such as data protection and privacy laws.

While the specific design features and diffusion strategies of digital infrastructures may not always travel across markets, these policy principles do. They provide useful guidance for the many emerging and developing nations that are seeking to build their own tech stacks to promote digital transactions, financial inclusion, and an ecosystem of fintechs and services that in turn increase economies’ productivity and incomes.

Kati Suominen is an adjunct fellow (non-resident) with the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.