Prime Minister Narendra Modi, on 2nd August 2021, launched the digital payment solution e-RUPI, a cashless and contactless instrument for digital payment. The eRUPI voucher will play a huge role in making Direct Benefit Transfer (DBT) more effective in digital transactions in the country. It will give a new dimension to digital governance and symbolize how India is progressing by connecting people’s lives with technology.
What is e-RUPI?
e-RUPI is a prepaid e-voucher that can be redeemed either through an SMS or a QR code by the intended beneficiary.
- It is a contactless and cashless digital payment system to ensure seamless benefit transfer and claims of keeping user data confidential.
- The system is now being used for payments at vaccination centres, but the government can extend it to provide direct benefit transfer (DBT), facilitating subsidies, scholarships, etc.
- It has been collaboratively developed by the National Payments Corporation of India (NPCI) with the department of the health ministry, financial services, and the National Health Authority.
- These e-RUPI vouchers are person-specific and purpose-specific and work as a one-time payment mechanism. Hence, they can be redeemed only for the intended purpose.
- Any government agency can generate these e-vouchers through their bank partners.
- It is basically like a prepaid gift-voucher (paid for by the government agency) without a physical card but delivered in the form of an SMS string or a QR code.
- Beneficiaries can redeem the voucher without internet banking access, a card, or a digital payments app.
- A person without a bank account or a smartphone can also avail of this service since feature phones will be able to receive the SMS string.
Many other countries, including the US, South Korea, Colombia, etc., use such vouchers for the delivery of benefits to citizens.
How does e-RUPI work?
e-RUPI is a voucher-based payment solution. Beneficiaries will get a QR code or SMS string-based e-Voucher by the Government or organizations for a specific purpose, which can be redeemed without using any digital payment applications, cards, or internet banking services. It is a pre-paid service and will ensure payment to the service provider after the transaction is completed.
Benefits of e-RUPI
Some of the benefits of e-RUPI are:
- e-RUPI does not require any beneficiary to have a smartphone, a card, internet banking access, or any bank account to avail of this service.
- Beneficiaries don’t need to share their personal details while redeeming the voucher, making it safer.
- The most important feature of e-RUPI is that the beneficiaries don’t need to have a bank account. This would be beneficial for the people in rural areas and among economically backward sections of society.
- Since it is an end-to-end digital transaction, it doesn’t require any physical issuance. Therefore, it is a more cost-effective payment solution.
- e-RUPI has the potential to support small businesses in taking direct benefit from various government schemes as well.
- It will promote financial inclusion in the country and will also ensure that government services reach the beneficiaries without leakage of funds and in a transparent manner.
How are e-RUPI vouchers issued?
The e-RUPI system has been onboarded by the banks that will be the issuing entities.
Government agencies will approach the partner banks and give the details regarding the beneficiaries and the purpose for which payment has to be made.
Beneficiaries will be identified using their mobile numbers. The voucher will be allocated to the service provider in the name of the beneficiary, which will be delivered to the intended beneficiary.
Which banks will issue e-RUPI vouchers?
Currently, NPCI has partnered with eleven banks for e-RUPI transactions. These banks are Bank of Baroda, Axis Bank, Canara Bank, ICICI Bank, Punjab National Bank, HDFC Bank, Indian Bank, Indusind Bank, Kotak Bank, Union Bank of India, State Bank of India.
Limitations of e-RUPI
A concern with the system is that the beneficiary is not required to disclose their identity; therefore, the vouchers are likely to be claimed by other people.
Is e-RUPI a Digital Currency?
No, it is not. It is a voucher system to ensure benefits reach eligible beneficiaries without any delays. However, it can be seen as a foremost step towards having a digital currency that will help the government learn more about the architecture of digital payments and the loopholes in the system.
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