> UPI for instance only works with a physical SIM. Your phone number on the account must match the physical SIM on the device. This indirectly relies on India's insistence on KYC (for accounts naturally) on issuance of physical SIMs. "Innovation" here would be a player who can support VOIP based phone numbers (maybe by complying with phone number KYC in some other way).

The Indian government has mandated this for strong identity assurances. Your only hope at "innovation" (ie violating financial services regulators and laws) here is cash or something like Monero.

> UPI also makes it quite confusing to deposit money to a particular account you own. You could share a specific identifier (string or qr) based on your account but the other party generally assumes they can send you money using your phone number, and sometimes follows through with that.

I haven't used UPI recently, but I imagine this is a UX issue around aliases (phone numbers, email, and other human identifiers that associate to an underlying account).

TLDR People problems cannot be fixed with tech (in this context, regulatory requirements or alias UX, submit a public comment to the regulator if you can).

> I don't disagree with most of your reply (thanks for the thoughtful citations too). But i wonder why the free market cannot lower cost/settlement time similarly.

Because without regulation, it turns into Monopoly (the board game). Sometimes, competition can be encouraged, but in some cases (broad, shared infrastructure) it cannot and regulation must fill this gap to ensure the target outcome. This is why we regulate electric utilities similarly. Happy to help, I am very interested and curious on this topic.