e-RUPI
What’s in the news?
- Prime Minister Narendra Modi recently launched a new digital payment system – e-RUPI – to send the government’s monetary benefits directly to beneficiaries’ mobile phones.
- The e-RUPI system is developed by National Payments Corporation of India (NPCI), Department of Financial Services, National Health Authority and Ministry of Health and Family Welfare.
What is the e-RUPI system?
- e-RUPI is a digital voucher that can be redeemed by beneficiaries when they make use of any specific government services. The digital system does not require a card, app or internet access to redeem the vouchers. The digital tokens will be sent to respective citizens by the government via SMS strings or QR codes to be used for a specific purpose.
- The digital token-style system is seen as a way to spot potential gaps in the existing welfare payments infrastructure and fix them.
How does it work and where can it be used?
- The cashless and contactless medium is similar to how a corporate-provided Sodexo coupon card works. The big difference is there won’t be any cards here. The beneficiary, citizen in this case, will be given digital vouchers to access targeted welfare services like medicines and nutritional support, and medical diagnostics under the government’s health schemes.
- A QR code or SMS-string will be sent to the beneficiary, and they will need to show it to the welfare service provider for the transaction to be complete. No printouts would be required. As these vouchers are created for a specific purpose, they can’t be transferred or cashed out.
- e-RUPI is powered by NPCI’s UPI platform and the service has onboarded about a dozen banks to be issuing entities. These include both private and public banking institutions. The beneficiaries will be identified by their mobile number, and the vouchers will be linked to it. The digital voucher can be redeemed only that individual.
- The government also plans to open the service to private enterprises so they can use it as part of their employee welfare or benefits programmes. If private companies opt to use e-RUPI for their employees, they will have to approach one of the partner banks with details of specific individuals and the service they would like to avail.
Is e-RUPI a digital currency?
- No, the e-RUPI is built for a specific transaction for a service availed at a particular welfare centre. The digital vouchers are backed by the Indian rupee and are not transferable. This puts e-RUPI within the framework of a voucher-based payment system rather than a virtual currency, which has a different character.
What are some challenges in implementing e-RUPI?
- According to data intelligence firm Data Reportal, the number of mobile connections in India as on January 2020 is equivalent to 78% of the total population.
- Enabling the roughly 22% of population to get a mobile phone to access welfare services via e-RUPI will be a problem to be solved.
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