The future of payments lies in going digital. One day, hard cash is going to be a lingering memory from the past. Thanks to initiatives such as e-RUPI, digital currency is developing at rates faster than the speed of light. But what is e-RUPI? Is it different from other forms of virtual currency? How will it be beneficial in the long run? In this blog, we’ll dive into this topic and learn all about e-RUPI.
e-RUPI is a form of digital currency – that is, it is any currency, money, or asset that is managed, stored, and exchanged on digital computer systems. Examples include cryptocurrency, virtual currency, and central bank digital currency (CBDC). The National Payments Corporation of India launched the e-RUPI on its UPI platform on August 2nd, 2021. This created a buzz amongst customers, corporates, and fintech institutions alike.
While initially, most assumed that it was a precursor of the Central Bank’s digital currency (CBDC), it turned out to be something else. Essentially, e-RUPI is a contactless and cashless mode of digital payment. Many entities, such as the Department of National Health Authority, the Ministry of Health and Family Welfare, and the Department of Financial Services collated with the NPCI to formulate and launch this solution.
e-RUPI was created to disperse welfare payments to the right people and parties. It requires a one-time payment facility to do this. That removes the need for middlemen. The program is thus connected to the rightful sponsors and beneficiaries directly. That’s similar to a digital gift card. You don’t need a bank account, an app, or even a smartphone to use this.
e-RUPI requires a one-time payment mechanism that works as a QR code. You can also use an SMS string to the beneficiary’s mobile number. The e-RUPI works like a prepaid gift card and can be redeemed at certain service provider touchpoints. This system makes sure that the service provider is paid for after the beneficiary completes the transaction. As it’s a prepaid facility, payment delivery is 100% certain, and there’s no requirement to depend on an intermediary for transfer.
One does not need a debit card, a credit card, or anything else for its function. e-RUPI is all set to connect beneficiaries as well as sponsors through digital means. There’s no need for a physical interface. The tool was built on the NPCI’s UPI platform and has on-boarded banks like SBI and ICICI as entities that can issue it. Any corporate entity or government agency can approach these entities and deploy an e-RUPI program today.
Banks who can issue and accept e-RUPI vouchers:
Banks who can only issue it:
The announcement of the e-RUPI came just a few days after declaring the Central Bank Digital Currency. So, many thought that the former was a precursor to the latter. But there’s a basic difference between the two. The e-RUPI is an e-voucher based system that distributes money and the Indian Rupee still supports it. The CBDC deals with money creation.
While India has some of the best welfare programs and subsidies in the world, funding for the same can be grossly misused. In many cases, people don’t receive the subsidies that are meant for them. There have even been situations where the beneficiary listed doesn’t even exist. The Indian government has lost millions in welfare payments such as these. To counter this, the government introduced the Aadhar-linked subsidy process. That allowed the government to directly transfer money into the beneficiary’s bank account in a system called Direct Benefit Transfer. That resulted in a roadblock as well, since there are many people in India devoid of a bank account or with insufficient facilities.
Using e-RUPI will help stop misappropriation of funds in the welfare system, and will eventually be used in systems such as Mother and Child welfare schemes, Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, for fertilizer subsidies, and more. Thus, e-RUPI can be used in many contexts. It will also help include the unbanked in the financial system.
e-RUPI will also be beneficial for medical expenses, such as COVID-19 vaccines. Businesses can take advantage of these under their CSR to people other than their employees and families.
This form of currency is set to revolutionize the financial world and many related facets.