How do architectural choices in payment system design affect financial market participation and structure? We examine this question by exploiting India’s launch of the Unified Payments Interface (UPI), an open, interoperable payment infrastructure that enables seamless cross-platform transactions across banks and fintech applications. Unlike closed-loop systems that create institutional silos, UPI’s open architecture allows users to transact across any participating platform, fundamentally altering the competitive landscape and access dynamics in financial markets. Using comprehensive data covering 19.8 million retail investors (2015-2020), we find that regions with greater exposure to early UPI-adopting banks experience substantial increases in financial market participation: 6.1% more monthly transactions and 8.6% more active investors per standard deviation of UPI exposure. Through multiple identification strategies—including natural experiments with bank holidays and telecommunications expansion, and direct comparison with State Bank of India’s closed YONO platform—we demonstrate these effects stem specifically from UPI’s interoperability rather than general digitization. We identify four complementary mechanisms: reduced transaction frictions enabling faster market response, lowered entry barriers for small participants, network externalities from cross platform integration, and transformation of savings behavior. However, open architecture’s democratization comes with systemic costs: small investors exhibit riskier behavior including lower diversification and negative long-term excess returns. Our findings reveal how payment infrastructure design choices create economy-wide implications for financial inclusion, market structure, and stability, providing crucial evidence for policymakers designing next-generation payment systems globally.