How e-RUPI is different from a digital currency?

e-RUPI is the first step towards the development of a digital currency in India, but it is more of a social service voucher system than a currency to ensure that specific benefits reach eligible beneficiaries promptly and with no discrepancies.

e-RUPI Overview

The Indian government has launched e-RUPI, a cashless payment system. This contactless payment system was launched by India’s Prime Minister, Shri Narendra Modi. e-Rupi Digital Payment can now be used to make payments from anywhere in the country.

Mobile users throughout the country will be able to pay using an SMS string or a QR code. It’s crucial to distinguish between e-RUPI and digital currency, which the Reserve Bank of India examines. Instead, it’s a person-specific, even purpose-specific digital voucher.

How e-RUPI is different from Digital Currency?

The Indian rupee will serve as the underlying asset for e-RUPI, making it a unique type of virtual currency. At the apex bank, a phased introduction of central bank digital currency is also ongoing. T Rabi Sankar, RBI deputy governor, has stressed the relevance of CBDCs (central bank digital currency) in recent months. He claims that these are not only desirable in terms of payment system benefits, but they may also be required to safeguard consumers from the volatility of private VCs.

Moreover, India’s growing appetite for digital payments and cryptocurrencies, such as Bitcoin and Ethereum, and an immense scope in terms of currency to GDP, which stands at 14.6%, and safeguarding retail investors from volatile cryptocurrency markets, add to this trend.

To put it another way, digital currencies are essentially the rupee, the country’s existing fiat currency. Because our current financial system is primarily equipped to cope with real currency, a massive legal revision would be required.

It is different from cryptocurrencies, which are used to purchase goods and services or trade for profit. In addition, it is regulated by the government. The government’s prepaid vouchers will primarily be used for welfare subsidies, at least initially. 

In terms of digital currency adoption in India, the Reserve Bank of India (RBI) declared in January this year that it is looking into the possibility of a central bank digital currency to help with financial inclusion.

Virtual cash trial programs have been launched in China, Europe, and a few other nations. Yet, cryptocurrencies such as Facebook’s Dash have prompted India to strive for trial projects in the wholesale and retail sectors.

By limiting the conversion of these vouchers to cash, the government is promoting liquidity in the economy. Rather, it is advising you to spend it. The government used to provide funds to beneficiaries that were either not utilised or were used for other purposes.

How will e-RUPI work?

e-RUPI is a cashless payment system. This app will be distributed to the general population of the country via an SMS string or QR code system. Beneficiaries can download the app directly by SMS or QR code. This app does not require a credit or debit card, a mobile app, or Internet access to shop.

Without sponsoring organizations needing to physically connect with anyone, this application may be deployed across the country. Prepaid gift cards are redeemable for any purchase. Furthermore, the e-RUPI service would connect service providers and recipients.

Why e-RUPI?

The new system, which was designed by several ministries, has the advantage of delivering timely and leak-proof payments to support initiatives such as mother and fertilizer subsidies, child welfare, pharmaceuticals and diagnostics, nutritional assistance, tuberculosis eradication, and so on. Furthermore, this method can be used for the private sector’s benefit, including employee welfare initiatives.

What is the process for the issuance of these e-Rupi vouchers?

This system was established by NPCI on the UPI platform, which is also linked to a number of banks. The banks that will be incorporated as issuing institutions are one of the major components of the plan. In addition, the e-Rupi system delivers nourishment and medicines directly to beneficiaries for mother and child welfare programs, as well as TB-eradication programs.

Is e-RUPI available now?

NPCI has already signed up over 1,600 hospitals to accept its e-RUPI. In the coming days, e-RUPI is projected to gain in popularity, with enterprises utilizing it to give employee benefits and SMEs using it for business-to-business (B2B) transactions.

What are the advantages of e-RUPI for consumers?

With e-RUPI, the beneficiary does not need to have a bank account, which is a considerable advantage over other kinds of digital payments. You also don’t have to disclose any personal information because the redemption process is two-step contactless.

A second benefit is that e-RUPI may be used on basic phones, allowing those without smartphones or Internet connection to use it.

Importance of e-RUPI

The government transfers money directly to beneficiaries via their bank accounts under direct benefit transfers. However, bank accounts are not available to many poor people. Many banks opened accounts as part of the “Jan Dhan Yojana”, but it became evident that not-so-poor people were also opening accounts.

The treatment of the poor by banks was not always ideal. Also, assistance payments meant to buy food can be transferred to other purposes. e-RUPI is anticipated to solve the majority of these issues. Benefits from the government can be accessed over the phone without the use of a bank account.

There is no need for paperwork or signatures. There is only one e-RUPI transaction at a time.

Benefits fraud is an uncommon occurrence. Furthermore, middlemen, touts, and lines are eliminated. The intended beneficiary can regulate e-RUPI payments because they must be processed with an OTP at the time of use.

Why should I care about e-RUPI?

If e-RUPI is successfully implemented, it will benefit both taxpayers and people. You pay taxes so the government can spend your money on social programs. If you use a targeted and specific system like e-RUPI, you will get more bang for your buck. Just the intended recipients will receive subsidies, as leakages will be reduced. As a result, there will be more savings and better spending.

e-RUPI could signify a shift away from government doles (state unemployment compensation) and toward economic advantages. e-RUPI gives a financial advantage to the beneficiary for a specific purpose while not being a digital currency. Payers have visibility into beneficiaries and can assist them in this way. It would be fantastic if you could keep track of every paisa you donate online.

In which nations do e-RUPI exist? 

Numerous countries, including the United States, South Korea, and others, have used voucher-based welfare incentives. Only a few states in the United States currently use a voucher-based system to deliver educational services.

With the effective implementation of e-RUPI, this government program has the potential to improve India’s GDP by 14%, which sounds positive for the Indian economy’s future.

Frequently Asked Questions

What is the full name of e-RUPI?

Narendra Modi launched e-RUPI, an electronic voucher-based digital payment system, to help with digital payments.

Is e-RUPI an application?

E-RUPI is neither an application nor a bank’s net payment system.

Is it possible to transfer an e-RUPI voucher to a friend?

Only the recipient to whom the e-RUPI voucher was assigned should utilize it.

How can a private company obtain e-RUPI Vouchers to distribute to its employees?

Private firms and organizations must contact their banks to receive e-RUPI vouchers for their personnel.

When and how will the government send beneficiaries e-RUPI vouchers?

SMS strings or QR codes will be used to deliver these vouchers to recipients’ mobile phones.

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