Combinatorial innovation: Unpacking the genius of India’s Unified Payments Interface

Balakrishnan Mahadevan and R. Srinivasan
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Balakrishnan Mahadevan: Centre for Digital Public Goods, India
R. Srinivasan: Professor of Strategy, Indian Institute of Management, India

Journal of Payments Strategy & Systems, 2025, vol. 19, issue 3, 291-308

Abstract: This paper examines combinatorial innovation, positing that significant technological and societal advancements frequently stem from the novel recombination of existing components, ideas and technologies rather than radical invention. Using India’s Unified Payments Interface (UPI) as a case study, it dissects how the National Payments Corporation of India created a globally impactful, transformative digital payment ecosystem through the strategic integration of existing elements, including real-time fund transfer mechanisms, application programming interface standards, third-party payment initiation models and QR code technology. The paper highlights UPI’s role as quintessential digital public infrastructure, illustrating how robust public infrastructure can be rapidly and cost-effectively assembled and deployed through combinatorial innovation. By analysing UPI’s rapid adoption, massive scale and profound impact on financial inclusion and merchant acceptance, this paper demonstrates how combinatorial innovation can lead to groundbreaking solutions without having to create new building blocks. Furthermore, UPI exemplifies reverse innovation: a solution developed for an emerging market that is now inspiring developed economies. The paper discusses the implications of this approach for fostering innovation and identifies an existing gap in network-level interoperability within the QR code ecosystem, presenting a missed opportunity for even greater resilience and competitiveness. This article is also included in the Business and Management Collection which can be accessed at http://hstalks/business.

Keywords: combinatorial innovation; UPI; financial inclusion; payment systems; NPCI; payment innovation; reverse innovation; digital public infrastructure (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2025
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