Open Transaction Network: Could this shift in technology transform the global economy?

For a thriving global economy, smooth transactions that encourage value creation and transferability are essential. Ideally, we want an economy that works on a universal digital system, making it easy to handle transactions across several platforms and stakeholders, known as interoperability. This approach is key to sparking innovation, promoting competition and ensuring open access. It helps prevent one party from having too much power or control over how things work in the market.

In the last 20 years, the platform economy has concentrated power among a few big companies, making competition harder and increasing economic inequality.

As these platforms grow, they often control things in a way that can limit buyers and sellers. This control becomes particularly problematic when users – consumers and suppliers – seeking to switch platforms find they cannot transfer their data and hard-earned reputation. The situation hampers the free “flow of value” essential for a fair market, stifling choice and innovation.

A new type of digital public infrastructure – Open Transaction Network (OTN) – is a pioneering way to address the growing challenge of reduced interoperability in the economy. OTNs are community-supported, open source and standardized. They allow for smooth transactions between individuals and organizations, irrespective of the platforms they use, making the digital landscape more inclusive and accessible.

At the forefront of this transformation is the Beckn Protocol (or “network protocol) – a globally recognized digital public good that unifies machine-friendly language, ensuring transaction-level interoperability across organizations within an OTN.

OTNs can thus facilitate a paradigm shift in the global economy, according to Bruce Schneier, security technologist and professor in public policy at the Harvard Kennedy School.

“By fostering a competitive rather than monopolistic landscape, By lowering barriers to entry, it can democratize technological access and stimulate generative collaboration and creativity,” he says, stressing it can make tech platforms more equitable and enable inclusive economic participation, paving the way for new markets and business models.

“Many complex problems, be it of social or economic inclusion, climate action or scaling new markets for sustainable livelihoods and solutions e.g. scaling an electronic vehicle charging ecosystem, deal with exponential costs when solving at population scale,” notes Sujith Nair, co-author of the Beckn Protocol.

“Instead of each of such efforts trying to solve by themselves a multitude of costs like cost of discovery and fulfilment, of transaction and trust, we could raise all efforts to a new common ground,” he continues. OTNs using the Beckn protocol are the shared infrastructure that distributes and reduces costs and risks across the ecosystem.

High-income countries are transforming – by demography, climate change and sustainability efforts, and industrial changes influenced by artificial intelligence (AI) and other technologies. OTNs, piloted worldwide over the last two years, are now being considered as an important policy intervention to establish robust transaction ecosystems across critical sectors such as urban mobility, energy transition and hyperlocal commerce, among others.

They can aid socio-economic development in low- or middle-income countries by increasing access to public services, stimulating economic growth, and boosting small businesses to reach wider markets. Policymakers in these regions are considering OTNs to boost further societal interventions in education and skills, agriculture, health and other sectors.

“In the mobility space in Europe, most integrations are based on one-on-one connections between transport operators and mobility providers,” says Jef Heyse, co-founder of Automicle, “This is time consuming and limits innovation, as only those integrations with a clear short-term business potential are established.”

Heyse explains that OTNs will support public transport operators, who are now obliged by European Union law to make data and tickets available on alternative ticketing platforms. Once OTNs are more widely known, other mobility solutions will take advantage of their flexibility and cost efficiency to integrate transport operators and mobility providers.

“The current steps we take in preparing the Open Amsterdam Network for hyperlocal commerce and hyperlocal delivery would not be possible [without] an OTN. Amsterdam entrepreneurs and cargo-bike couriers will be some of the first in Europe to demonstrate the capabilities of OTNs,” Heyse says.

Brazil saw its first city-wide OTN in Belem with the Open Belem Mission or Rede Belem Aberta, aiming to connect producers to markets with a sustainable objective.

“The RBA Open Transaction Network is opening new avenues for private, public sector and academia collaboration here in Belém,” explains Marcelo Sa, Founder and CEO, Jambu Tecnologia.

“Coupled with the Belém Innovation District, it is the much needed catalyst for technology-driven socio-economic progress, beginning with unlocking upskilling and employment opportunities and I am confident this effort could set the foundation for more such societal interventions in other cities of Brazil and Latin America at large,” says Sa.

India also boasts population-scale OTNs through Open Network for Digital Commerce (ONDC), a pilot launched in April 2022 targeting grocery and food delivery across India.

It is built upon the fundamental principles of transaction interoperability, unbundling of the building blocks of digital commerce and ecosystem participation, explains T Koshy, managing director and chief executive officer of ONDC.

“This initiative, at its core, a solid force multiplier to accelerate the digital transformation of [micro, small and medium-sized enterprises] augment” choice” for consumers, while broadening the business potential for incumbent and new market players,” he says. Others are also seeing OTNs’ early potential and impact.

“Open, interoperable and inclusive transaction networks are critical for unlocking the full potential of the digital economy in developing countries. The OGa initiative in the Gambia is a pioneering example, paving the way for others to follow in the region and beyond,” adds Joseph Jassey, acting country executive director of the Foundation for Digital Economy Africa.

The OTN-based ecosystem redefines the market economy, representing not just technological advancement but also a profound transformation in how value is created, distributed, and consumed across sectors.

Views expressed in this blog are those of the authors and do not necessarily represent the views of the funding agencies, companies or institutions mentioned.