Local-rail and virtual-account infrastructure

Why this is interesting

• Kae divides cross-border fintech into infrastructure and applications. Infrastructure connects to local banking rails in sending and receiving countries, creates virtual accounts so customers can use local payment methods and hold several currencies, and needs licences in each geography. The essay sees network effects as each added corridor improves the service, but does not expect a single winner.
• This is an investor’s market structure, not a buyer’s problem statement. The model is global; the India-specific part is licensing. The source describes India’s regime as it stood in early 2023. On 31 October 2023 the Reserve Bank of India brought entities that facilitate cross-border payments for imports and exports under its direct regulation as Payment Aggregator - Cross Border, so the current rules need checking before relying on the source’s description.