India Unveils Plans for Digital Rupee (e-RUPI)
India’s digital payments system will undergo a significant makeover!As revealed On Sunday, August 1 by Prime Minister Narendra Modi, on Monday, August 2 at 4:00 PM IST, he introduced e-RUPI, a futuristic digital payment system. The e-RUPI initiative intends to transition India to a cashless and contactless digital payment society.
Furthermore, it will aid in the establishment of a clear digital link between service funders (sponsors) and recipients. It would also guarantee that there is no slippage in the execution of the Government of India’s social programs. According to the press statement, e-RUPI would be a “cashless and contactless” digital payment device. That’ll be a QR-code or SMS string-based e-Voucher that recipients may readily access on their smartphone.
These coupons may be used without the need of cards, online banking, or a digital payments application. This innovative payment system was created by the National Payments Corporation on the same architecture as UPI (Unified Payments Interface).
“e-RUPI links the service funders with the recipients and service providers digitally but with no physical link,” per the official announcement. It also guarantees that money is provided to the service provider only when the deal is finished. Because it is pre-paid, it ensures prompt payment to the service provider without the participation of any third-party.”
As previously said, e-RUPI is a step toward increasing the use of digital transactions in India. It is unclear, nevertheless, if the e-RUPI system would lay the groundwork for India’s CBDC goals. The government appears to be primarily concerned with using the e-RUPI system to ensure the distribution of welfare benefits is leak-proof.
It would also be used to offer services such as medication and nutritional assistance “via Mother and Child Welfare schemes, TB elimination programs, drugs & diagnostics under initiatives such as Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertilizer subsidies, and many more.”
The media release also mentions that e-RUPI digital coupons may be beneficial for businesses. These coupons can be used by private entities as element of their employee welfare and corporate social responsibility programs. The e-RUPI debut appears to be the Indian government’s groundwork for a more complex framework, such as the central bank digital currency (CBDC). The Reserve Bank of India (RBI), India’s central bank, has previously expressed interest in establishing the Digital Rupee.
Some of the benefits of e-RUPI are:
Cashless and contactless digital payment.
Connects service sponsors and beneficiaries digitally.
Ensures leak-proof delivery of various welfare services.
— Narendra Modi (@narendramodi) August 1, 2021
Nevertheless, Indian authorities have been very sluggish in implementing rules for digital currency usage. As a result, the idea of establishing a CBDC remains a faraway vision.