eRUPI — Foundation for Indian Digital Currency?
Is this a new Cryptocurrency?
No.
Is this RBI’s digital currency?
No. :-(
Then what it is?
This is a new digital payment solution by GOI launched on 02/Aug/2021.
It will directly or indirectly help almost 90Crore (900M) people and 300+ government schemes.
Currently, the government helps beneficiaries through DBT (Direct Benefit Transfer) where they directly make money transfer to their Jan-Dhan bank account.
But they are unable to track if that money was used to avail those benefits or not. What is the guarantee that those 10,000 Rs transferred for the scholarship is actually helping student study better and not buying something else?
This is going to play a huge role in making DBT more effective by making it targeted, transparent and leakproof. It can be used for medical, educational, farming and more.
So, let’s understand this whole thing.
What is e-RUPI?
This is(can be) the first step toward RBI’s Digital currency.
This is developed by NPCI (National Payment Corporation of India) on top of its UPI platform in collaboration with the Department of Financial Service, Ministry of Health and Family Welfare and National Health Authority and it’ll be a person and purpose-specific payment system.
How it’ll work?
This is a prepaid, voucher-type cashless and contactless digital payment medium that will be delivered to mobile phones of beneficiaries in form of a QR code or SMS string. These vouchers will be redeemable at specific accepting centers without any credit/debit card, mobile app or internet banking.
This will connect the sponsor of services with the beneficiaries and service provider, digitally. One voucher can be used once only.
How it’ll be issued:-
Any corporate or government agency will have to approach the partner banks, which are both public and private sector lenders, with the details of the specific person and the purpose for which payment has to be made.
The beneficiaries will be identified by their mobile number and a voucher allotted by the bank to the service provider in the name of a given person would only be delivered to that person.
How it is different from online payment:-
This is not a platform but a purpose-based voucher service.
Even if someone does not have a bank account, a digital payment app or even a bank account can also benefit from these vouchers.
What it’ll be used for:-
It is expected to ensure a transparent and leak-proof delivery of welfare services for the Department of Financial Service, Ministry of Health and Family Welfare and National Health Authority.
According to GOI, even the private sector can also leverage this service as part of their employee welfare and corporate social responsibility program.
1641 hospitals live under this scheme.
Benefits:
The person/organization buying these vouchers and issuing them to others can track the utilization of the vouchers. Beneficiaries don’t have to share any personal details with the service provider.
Similar Schemes elsewhere :
E-Sodexo, food and education vouchers in USA, school vouchers in Colombia, Chile, Sweden, Hong-kong and more.
Future:
The government is already working on developing a CBDC(central bank digital currency). The launch of e-RUPI could potentially highlight the gaps in payment infrastructure that are necessary for the success of the future digital currency.
e-RUPI is still backed by the existing Indian rupee as the underlying asset and the specificity of its purpose makes it different from a virtual currency and puts it closer to a voucher-based payment system.
RBI has said earlier that they are working on a phased implementation strategy for CBDC even though they do not favor cryptocurrency.
Although CBDC is conceptually similar to currency notes, the introduction of CBDC would involve changes to the enabling legal framework since the current provisions are primarily synced for currency in paper form.
