Building Digital Public Infrastructure: Lessons Learned from Kazakhstan

Policy Playbook for DPI: Open, Competitive, and Secure

What can countries interested in adopting DPIs and promoting digital payments learn from the 10 countries examined here, each with somewhat distinct DPI journeys, and from the Kazakh case in particular?

Overall, there are at least seven fundamentals, all of them in the Kazakh policy playbook and to varying degrees also present in the other countries’ transformations (see Table 2).

1. Competition and level playing fields in payment markets. Throughout its digital transformation journey, Kazakhstan has emphasized public-private collaboration and partnerships, building a comprehensive digital infrastructure that promotes user choice. The NBK has taken steps to reduce bank concentration and promote competition and inclusion by implementing various components of the National Digital Financial Infrastructure: biometric identification, a QR code, instant payments, open banking policies, the National Digital Currency, and open APIs. The NBK has also created capabilities for market participants to test and bring to market collaborative and interoperable solutions through an API technology sandbox. The 2023 open-API infrastructure pilot consisted of three mobile banking apps and 130 customers from five of the country’s leading banks and resulted in a product that ensures the security of transmitted data and transactions. In addition to cooperation with the private sector, Kazakhstan has created interministerial committees and working groups to ensure collaboration among different government agencies in digital transformation and DPI implementations.

   Kazakhstan’s purposeful inclusion of open competition and level playing fields among all market participants is similar to that of four advanced economies with nearly universal use of digital payments—Estonia, Singapore, Sweden, and the United Kingdom. These countries promote competition and inclusion of all market players in their payment systems. These approaches provide users choice and flexibility at the point of purchase, positive fuel network effects, and easier cross-border transactions.

   Thailand and Peru have pursued similar models. In Thailand, the PromptPay System is the result of public-private partnership and enables users to connect to any payment app or card. In Peru, the Central Reserve Bank of Peru (BCRP) is currently working on an instant payment system in close coordination with all market participants. The BCRP has also mandated interoperability between all digital wallets and mobile payments, such as the widely used PLIN and Yape. As a result, Peruvians are able to transfer funds digitally to any other Peruvian. Even Peru’s unbanked are connected to the digital payment systems through virtual cards that are issued instantly for sending and receiving funds.

   These models contrast with Brazil’s Pix and India’s UPI, which are government sponsored and limit consumer choice of digital payments. Both India and Brazil have promoted the use of a specific payment system—UPI and Pix, respectively—and made banks prioritize these systems in lieu of expanding competition and partnerships across various payment rails. The Brazilian Central Bank Governor has even discussed Pix as potentially negating the need for credit cards entirely. In India, the government subsidizes banks to utilize UPI payments, raising questions about the system’s sustainability. The G20 has raised concerns about the sustainability of DPIs, noting that the ecosystem at large would be undermined if entities that manage DPIs were to become financially unsustainable.
    

2. Secure digital identity opening access to multiple public and private services. Biometrics-based IDs have become increasingly popular: as of 2024, some 54 countries use fingerprints and 31 use facial images for identification. Kazakhstan has built biometrics-based digital IDs for users to utilize e-government services and safely make payments across the ecosystem. The regulatory framework for the use of digital identification methods in the provision of electronic banking services—for example, electronic digital signature, one-time password (OTP) passwords, and biometric identification—was created in 2016. The Digital Kazakhstan program of 2018–2022 positioned the digital ID as the key to public and private service delivery and for accessing e-government services, thereby also reducing bureaucracy and increasing transparency. To be sure, biometric ID systems are not watertight and need robust cybersecurity and data privacy protections. India’s Aadhar, for example, suffered a major data breach in 2023, leaving 815 million Indians’ data exposed. Peru too has faced challenges with digital identity verification. 
    
3. Public-private partnerships to promote digital transactions and e-government services and transfers. Kazakhstan’s DPI journey exemplifies the potential for private sector leadership and public-private partnerships in developing DPIs. The government collaborates with private banks to allow government services to be integrated into banking superapps. In addition, recent legislation that legally equates digital documents to physical ones has enabled citizens to use their digital IDs to access services on banking apps instead of physically traveling to a bank branch. Other governments that have been particularly successful at promoting digital payments have cooperated closely with the private sector to meet their digital transformation targets, often even following the private sector’s lead to develop market-led solutions. For example, Sweden’s popular Swish mobile payment system was developed through a partnership between major Swedish banks and the Riksbank; the United Kingdom’s Faster Payments Service was created by a consortium of banks. In its meteoric rise to one of the world’s most digitized economies, Estonia has worked closely with technology companies and financial institutions to develop and implement digital solutions as well. 
    
4. Consumer protection and cybersecurity frameworks and mechanisms to monitor and address fraud in the financial system. As payments have become digitized and as e-commerce has been mainstreamed into citizens’ daily lives, incidences of online fraud have increased. Kazakhstan has had challenges with fraud and, like other Central Asian economies, struggles with cybersecurity challenges and data protection. However, while Kazakhstan is only 78th in the world on the 2016–2023 National Cybersecurity Index, it has attained one of the world’s best ratings on the protection of e-identity and trust services, which has likely facilitated the uptake of the digital ID and payments. In addition, Kazakhstan has sought to prevent fraud through a 2022 Central Bank mandate that requires financial institutions to adopt cybersecurity protocols to protect sensitive financial data. Moreover, in 2024, the Central Bank launched a new Anti-Fraud Center to promptly respond to fraudulent activities, block suspicious money transfers, and maintain a blacklist of suspicious mobile numbers. 

   India and Brazil have faced significant challenges with fraud as well. A total of 57 percent of consumers in India believe that their friends or family members have been victims of a fast-payment system scam on UPI, while in Brazil, 65 percent believe that their friends or family members have been victims of a Pix scam. Fraud has also increased in advanced markets like Singapore, where the government reported a 70 percent increase in fraud incidence in 2022–2023, though this only impacted 1 percent of Singaporeans. 

   Other advanced and emerging market central banks have employed diverse technology and various regulatory and monitoring solutions to mitigate fraud in digital payments and banking. Central banks in India, Singapore, and the United Kingdom have established a comprehensive set of indicators for banks to monitor and report incidences of fraud. In Thailand, the Electronic Transactions Development Agency (ETDA) enforces strict regulations, including regular security audits and incident reporting protocols. Data is limited on the success of these initiatives. 
    

5. Promotion of innovation in financial services. The fifth key policy in Kazakhstan’s digital transformation is promoting innovation in payments and financial services, a policy adopted by practically all countries studied here. The NBK’s regulatory sandbox is aimed at increasing the flexibility of financial market regulation and introducing new financial products. The term for the special regulatory regime can run up to five years, a long period of testing from a global perspective—most sandboxes cap the period to two years. The government-sponsored incubator Astana Hub features more than 1,500 tech companies, including 400 foreign ones, and research and development partnerships with global companies like Nokia. The government has also promoted venture capital into start-ups and scale-ups through a 2018 law that paved the way for the establishment of public angel investment entities.
    
6. Digital inclusion as pathway to financial inclusion. Comprehensive digital inclusion policies underpin Kazakhstan’s broad-based digital payments adoption and financial inclusion efforts. Access to the internet and smartphones has promoted remote payments around the world, especially during the Covid-19 pandemic. Kazakhstan is no exception. Around 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 in Kazakhstan have a mobile phone, and mobile broadband has expanded to cover 89 percent of the population. The Digital Kazakhstan program targets investments to fiber optic cables and the expansion of the 4G LTE network. As of 2024, mobile operators are working to expand 5G coverage in Astana, Almaty, Shymkent, and regional centers to finalize a 5G mobile communications rollout by the end of 2025. 

   Other large emerging markets have sought to drive financial inclusion through digital inclusion as well. Brazil has connected 87 percent of its population through systematic investments and programs like Internet Para Todos, which aims to expand internet access in underserved and remote areas. Almost 90 percent of Peruvian households and 74 percent of Peruvians have mobile internet, thanks to systematic investments, public-private partnerships, and satellite internet in remote regions of the Amazon. Turkey has been investing in fiber optic networks and improving internet connectivity to ensure that people in urban and rural areas can use digital services. India has been working to catch up with other markets in recent years, connecting 52 percent of Indians as of 2024, up from 14 percent in 2014. 

   India, Peru, and Turkey have also committed to lowering the costs of smartphones and devices by participating in the World Trade Organization’s (WTO) Information Technology Agreement (ITA), which commits parties to liberalize imports of devices and IT products. In Brazil, the government has created incentives for businesses and individuals to adopt digital tools, such as tax benefits for digital transactions and subsidies for low-income households to access digital devices and services. 
    

7. 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. In 2020, the government approved a plan for improving financial literacy for 2020–2024, aligned with the recommendations of the Organisation for Economic Co-operation and Development (OECD). The initiative aims to improve consumers’ understanding about financial services and to protect their rights and interests. There have also been multiple digital literacy campaigns. For example, in light of persistent challenges for teachers to acquire adequate digital competencies, in August 2023, the Kazakh Ministry of Education launched a pilot project in six Kazakh regions to upgrade teachers’ qualifications to use and teach modern digital technologies in small rural schools. Practically all countries surveyed here have run similar educational campaigns to promote the adoption and use of digital payments, identity systems, as well as e-commerce and financial technologies for different types of beneficiaries, such as small businesses and rural populations. For example, Brazil has several digital literacy programs aimed at teaching populations around the country to use digital tools effectively. Turkey’s Ministry of Trade has introduced the E-Export Consortium model, which helps companies in cross-border e-commerce access end consumers through various e-commerce channels.

These success drivers related to the deployment, maintenance, and governance of DPIs were 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; providing ancillary government support systems, such as government-to-person (G2P) digital payments; and creating conducive legal and regulatory frameworks, such as data protection and privacy laws.

In the Nextrade Group’s 2023 analysis of 15 policies within these three dimensions across 190 economies, there are significant variations in DPI readiness—Kazakhstan ranks 51st out of 190 countries, while many economies aspiring for DPIs, for example in sub-Saharan Africa, still fare quite poorly, indicating the need for much more fundamental work prior to the introduction of DPIs.

Granted, all economies—even the most advanced, with solid enabling environments for DPIs—face challenges in their digital transformation journey. One major challenge is cybersecurity, where the threat environment evolves quickly with technological advancements. Another is ensuring DPIs contribute to cross-border payments in a world where companies and consumers around the world habitually use e-commerce to transact across borders. In addition, DPIs’ business models and sustainability remain question marks in markets such as India where governments subsidize DPIs. This paper has shown that many other countries have opted for market-led digital transformations and succeeded, through private sector solutions, at creating ubiquitous and inclusive digital payments ecosystems, governments policies promoting level playing fields, competition, and solid policy-enabling environments. For the international community analyzing and promoting DPIs in developing nations, there is a great need for clear common definitions of DPIs, and for rigorous measurement of DPIs’ usage, functioning, and development results.

Conclusion

Payments have digitized around the world, yet considerable gaps remain—some 1.4 billion people have yet to use any digital payments. Typically, technology is not the challenge; rather, the challenge lies in the adoption and implementation of policies and practices conducive to digital payments’ adoption and use.

This paper has reviewed Kazakhstan’s journey digitizing transactions across the population and building robust e-commerce and financial services ecosystems that are increasingly universally used by Kazakhs in their daily lives. At a time when many governments look to instant payments, Kazakhstan’s example shows that an impactful and inclusive digital payment infrastructure can be developed by enabling multiple and competing payment solutions.

Several policies and design choices have contributed to Kazakhstan’s success, such as their focus on the adoption of policies and regulations that have enabled an open, competitive, and innovative payment infrastructure conducive to consumer choice, and public-private partnerships to promote digital transactions and e-government services and financial transfers.

These policy moves in Kazakhstan have created an economy where nine out of ten payments are digitized, where businesses have shifted to selling online, and where consumers use their phones almost daily to shop online, pay for goods and services, secure loans, access public services, and transact with the government.

While Kazakhstan’s specific digital infrastructure design features and diffusion strategies 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 their economies’ productivity and incomes.

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

This report was made possible through generous support from Visa Inc.

Please consult the PDF for references and tables with more information on digital public infrastructure elements and policies across countries.