What is e-RUPI?

Digital currency is the future of the modern economy due to its beneficial impacts on financial systems. Several countries across the globe hold their digital currency, and taking the step forward in this direction, the Indian Prime Minister recently introduced the electronic voucher-based digital payment known as e-RUPI. This launch, according to various financial experts, is a foundation stone towards owning a digital currency. 

The primary purpose of launching this digital currency is to assure a leak-proof delivery of the welfare programs, as online transactions become omnipresent in India, with the Unified Payments Interface or UPI seeing record transactions every month. 

The concept is simple, and it is already being used in the United States, Hong Kong, and a lot of other countries: prepaid coupons for specific purposes. India, as a financial technology leader and an enthusiast of techno-solutionism, is striving for something comparable.

How does e-RUPI work?

The digital payment solution is powered by the NPCI (National Payments Corporation of India). Banks have been accepted as sanctioning entities by the NPCI. Any company or government entity will need to contact one of the bank branches, comprising both private and public sector financial institutions, to request e-RUPI coupons for a specific group of people. 

The Banks Live with e-RUPI voucher distribution are HDFC Bank, State Bank of India, Axis Bank, Bank of Baroda, Canara Bank, Punjab National Bank, ICICI Bank, and IndusInd Bank.

Source: e-RUPI – Digital Payment Solution

Apart from this, the recipients will be identified by their cell phone numbers and a one-time passcode received through text messages. A QR code will be sent to the recipient at the time of payment through the discount code. 

To view and accept the electronic-RUPI coupon and OTP, the seller will only need an application. These coupons are non-transferable and can only be used for one payment. Moreover, as per a report, one coupon may have a maximum transaction restriction of Rs 10,000. 

What are the benefits of using e-RUPI?

In the wake of the Covid-19 outbreak, e-RUPI came in as a ray of hope as the effectiveness of government welfare programs was constantly being questioned. During the nationwide lockdown to combat the transmission of Covid-19 this year, the government promoted its direct benefit transfers (DBT) to recipients’ savings accounts, which led to refugee migration from India’s cities. 

However, later studies discovered that the DBT transfers failed to reach a significant portion of the underprivileged, eligible for federal assistance but lacked a Jan Dhan savings account. Vulnerable groups were the most affected. As the second phase of Covid-19 ravaged the nation between April and June this year, these very same uncertainties remain – the reach of the government’s financial assistance to the poor. 

DBTs are being made even more effortless with e-RUPI, as the recipient will no longer need a savings account to receive financial help from the government. e-RUPI could also be used for medications and nutritional support under Mothers and Children Welfare schemes, tuberculosis eradication initiatives, drugs, and diagnostic tools under Ayushman Bharat Rashtriya Swasthya Bima Yojana, fertilizer application subsidies, and other government schemes. 

Employee welfare initiatives and Corporate Social Responsibility (CSR) commitments can both benefit from e-RUPI. The launch of e-RUPI coincides with the RBI’s announcement of a pilot program for its Central Bank Digital Currency. ‘CBDCs’. This is a visual depiction of the nation’s paper money, the rupee, as in this scenario. 

One of the possible CBDC use-cases in India, according to experts, is cash entitlements. Even before more information about India’s CBDC becomes official, that prerequisite appears to have met with e-RUPI. Notably, unlike e-RUPI, China’s edition of CBDC, or the Virtual Yuan, does not necessitate the use of the internet. 

Prepaid coupons for welfare assistance are not a new concept, as previously stated. The United States provides food stamps to the homeless, as well as teaching and education gift cards. Government banks in India could now use e-RUPI to benefit the poor, especially those without a savings account, with incentives on LPG and electricity. 

Benefits of e-RUPI for the healthcare industry 

• This easy-to-use secure online voucher is verified through an authentication code conveyed by the recipient.
• No requirement of physical cash or card leads to hassle-free, contactless payments in hospitals. 
• Due to its pre-blocked sum, this voucher can readily be redeemed in some quick steps without any glitches. 

Benefits of e-RUPI for corporations

• Corporates can secure the health of their employees by providing them with UPI Prepaid Vouchers.
• This end-to-end digital transaction eliminates the need for any physical issuance (card/voucher) and facilitates cost reduction.
• No requirement of physical distribution leads to quick and contactless voucher allocation.
• Companies can track their employees’ voucher redemption and utilization.

Benefits of e-RUPI for end-users 

• Contactless payments as there is no need to carry any physical print of the e-RUPI voucher. 
• Quick redemption in just two steps.
• This secured voucher never shares any personal details and maintains better privacy.
• End-users can readily redeem these e-RUPI vouchers via their mobile phone without requiring any bank account or online payment app. 

e-RUPI and Cryptocurrency 

This launch of e-RUPI will present a whole new level to information technology governance. Many crypto supporters now believe that crypto assets and means to foster the digital ecosystem can coexist. In addition, this electronic voucher will help the country become the world’s leader in digital payments. 

Furthermore, just like cryptocurrencies, this e-RUPI voucher warrants privacy and data security as there is no need for any personal information required during redemption. Hence we can say that this is a welcoming change for the Indian financial market, and it is believed that this launch will pave the way for digital currencies in the country. 

Also, while the purpose of e-RUPI and cryptocurrencies is the same – to reach an unbacked population, their approach differs. Cryptocurrency, based on a blockchain system, is a decentralized medium of exchange, whereas e-RUPI vouchers, based on UPI, are centralized with a unique digital payment protocol. 

To sum up, we can say that with the introduction of e-RUPI, the transactions will be smoother, and the underprivileged people will also be able to get their portion of the money. 

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.