The Indian government is on the cusp of unveiling e-RUPI, an innovative electronic voucher-based digital payment system. Pioneering countries like the United States, Colombia, Chile, Sweden, and Hong Kong have paved the way using a similar voucher system.
Understanding e-RUPI
e-RUPI is predicated on contactless and cash-free digital transactions. The system utilizes a Quick Response (QR) code or SMS string-based e-voucher which is directly delivered to the user’s mobile phone. Users can readily redeem vouchers without requiring a card, digital payments app, or access to internet banking at the service provider’s location.
This mechanism offers a direct digital link between the service sponsors, beneficiaries, and providers eliminating the need for physical interfaces. It ensures that the service provider receives payment only after the transaction has been completed, making it a pre-paid and prompt solution that bypasses any intermediaries.
Contrasting e-RUPI with Virtual Currency
Despite being a digital entity, e-RUPI differs from virtual currencies because it is anchored in the Indian Rupee. Its exclusive usage defines it more as a voucher-based payment system rather than a virtual currency.
Process of Issuance and Beneficiary Identification
The National Payments Corporation of India has developed this unique payment mechanism on its Unified Payments Interface (UPI) platform, in association with the Department of Financial Services, Ministry of Health & Family Welfare, and National Health Authority. Certain banks have been designated as issuing entities. Any corporate or governmental agency wishing to make payments will have to present the details of the recipients and the payment purpose to these partner banks. Recipients are identified by their mobile numbers and vouchers allocated to them are strictly personalized.
Application of e-RUPI in Government and Private Sector
The government anticipates that e-RUPI will ensure a secure delivery of welfare services. It is planned for use in several schemes, such as Mother and Child welfare schemes, Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, and even for distributing fertilizer subsidies. The private sector can also utilize these digital vouchers in their employee welfare programs and Corporate Social Responsibility (CSR) initiatives.
e-RUPI’s Potential Role in the Future of Digital Currency
As the government continues to develop a Central Bank Digital Currency (CBDC), the introduction of e-RUPI might highlight the need for improvement in the existing digital payments infrastructure.
Emerging Trends in Digital Currency in India
According to the Reserve Bank of India (RBI), digital currencies are set to thrive in India due to four main factors. Firstly, there’s an ever-increasing acceptance of digital payments, in addition to a sustained preference for cash usage for smaller transactions. Secondly, India’s high Cash-to-GDP ratio provides another impetus for CBDCs. Thirdly, the spreading popularity of private virtual currencies like Bitcoin and Ethereum makes CBDCs more influential from the central bank’s perspective. Lastly, CBDCs might provide a safety net for the public in a volatile environment of private virtual currencies.
