DRUMBEATERS FOR FINANCIAL inclusion are excited about India. With 190m adults without bank or mobile-money accounts, of whom an estimated 100m have mobile phones, it is second only to China in its potential. It has also become, in the words of Greta Bull, the chief executive of the Consultative Group to Assist the Poor, where “Silicon Valley battles China”.

Successive Indian governments have actively promoted both the opening of bank accounts and the expansion of digital money. To nurture Aadhaar, the national-identity digital database, the previous Indian government in 2009 recruited Nandan Nilekani, a former boss of Infosys, a big Indian software and outsourcing firm. Now back at Infosys, he says that the current Indian government is even more enthusiastic about the project. Both administrations recognised, he says, that it is “the only way to achieve financial inclusion at scale”. In some ways, he adds, “we have leapfrogged the rich world.”

Indians now have about 800m bank accounts linked to Aadhaar. Account-holders do not even need a phone to get at their money. Some merchants have thumbprint readers. Aadhaar forms part of what is called, in techie jargon, the “India Stack”, a set of interlinked digital platforms that allow smooth transfers to and from bank accounts via a “Universal Payments Interface” (UPI). Bank accounts can be linked to a UPI address, allowing immediate payment to be made from one account to another.

Launched in 2016, it has had a decent start. By this March it was handling around 178m transactions, worth about $3.6bn, reaching a larger number in 18 months than credit cards have managed in India in 18 years. Dilip Asbe, chief executive of the National Payments Corporation of India, the bank-owned non-profit organisation responsible for the UPI, says that it will be small merchants who ultimately determine success. As the system beds in, he believes that more and more of them will start accepting QR-code-based payments.

Global giants are now competing to develop applications for this interface. Google launched an app called Tez (Hindi for “fast”) last September. By this March it already had 14m active users a month and was accepted as a form of payment by over 500,000 merchants. Designed to resemble a messaging system, it also offers “proximity payments”—two nearby phones can be paired through an ultrasound signal (“audioQR”) and money sent between them without the phone number or any other personal details being shared (a relief, in particular, to many women). WhatsApp, a messaging service owned by Facebook, has also been experimenting with a UPI-based payments system.

But the biggest rival is a domestic online retailer and mobile-payment firm, Paytm (for “pay through mobile”), which in February handled 40% of India’s UPI payments. Claiming over 300m accounts, it provides the country’s most popular mobile wallet. Alibaba and Ant Financial are minority shareholders. Around 150 Ant engineers have worked in India on Paytm’s systems at one time or another. Tencent, meanwhile, has invested in PhonePe, a mobile-payments competitor offered by Flipkart, another Indian online retailer.

Mobile payments got a big boost in November 2016 when India’s prime minister, Narendra Modi, abruptly announced the withdrawal of high-value banknotes, which made up 86% of the rupees in circulation. The number of Paytm accounts increased from 115m at the time of the announcement to 160m in just 60 days. In retrospect, this can be seen as one of the stages in a payment revolution in India. The final destination seems an unlikely one for such a poor country, but according to Mr Asbe, “the ultimate aim is to replace cash.”