- The new digital payment infrastructure will help India accelerate its mission of moving to digital money.
- In addition, it will facilitate transparent and leak-proof payment transfer initiated by several payment services.
India is all set to witness a major overhaul to its digital payments infrastructure later today! On Sunday, August 1, Prime Minister Narendra Modi announced that he will unveil a futuristic digital payment solution e-RUPI on Monday, August 2 at 4:00 PM IST.
The e-RUPI aims to move India towards a cashless and contactless digital payment economy. Besides, it will help to establish a transparent digital bridge between service sponsors and beneficiaries. It will further ensure that there’s no leakage in the delivery of welfare services initiated by the Government of India.
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
As noted in the press release, e-RUPI will be a “cashless and contactless” instrument for digital payments. It will be a QR-code or SMS string-based e-Voucher that can be easily accessed by the beneficiaries on the smartphone. The user can redeem these vouchers without cards, internet bank access, or digital payments app.
The National Payments Corporation has developed this new payment system on the same platform as that of UPI (Unified Payments Interface). The announcement notes:
e-RUPI connects the sponsors of the services with the beneficiaries and service providers in a digital manner without any physical interface. It also ensures that the payment to the service provider is made only after the transaction is completed. Being pre-paid in nature, it assures timely payment to the service provider without involvement of any intermediary.
Applications of the e-RUPI payments system
As said, the e-RUPI is a step in pushing further the use of digital payments in India. However, it is not clear if the e-RUPI system will pave way for India’s CBDC ambitions. The government looks largely focused on using the e-RUPI system for leak-proof delivery of welfare services.
It will further have its applications in delivering services for providing drugs and nutritional support “under Mother and Child welfare schemes, TB eradication programmes, drugs & diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertilizer subsidies etc”.
The press release also notes that the e-RUPI digital vouchers could be useful for corporates. Private players can use these vouchers as part of their employee welfare and corporate social responsibility programmes.
It looks like the e-RUPI launch is the Indian government’s preparation to move towards a more sophisticated infrastructure like the central bank digital currency (CBDC). India’s central bank – the Reserve Bank of India (RBI) – has already shown interest in launching the Digital Rupee.
However, Indian regulators have been very much slow in adopting standards for the use of digital currencies. Thus, the plan of launching a CBDC is still a distant dream.