Shortly on the heels of RBI’s note on central bank digital currency, e-RUPI has been launched as a government initiative to seamlessly pass on welfare positive aspects to eligible beneficiaries.
This digital payment instrument is in the type of pre-paid digital vouchers, which is straight delivered to the phones of beneficiaries, and might be employed for obtain of precise goods or services, but can not be converted to money or transferred to one more individual.
“E-RUPI is a purpose-specific payments instrument that works with smartphones and features and can be used without a bank account. These capabilities significantly increase the chances of its adoption. E-RUPI can also be used by lenders to give credit to borrowers where the usage of the funds can be specified. This is great to open credit for first-time borrowers,” mentioned Abhinav Sinha, CEO, Eko.
According to Think360 Co-founder Monish Salot, “The instrument allows users to make digital payments – not just in a traditional digital sender to digital receiver way, but also in a digital sender to offline receiver manner.”
“The announcement has caused a lot of stir – starting with the idea that it is a person and “purpose” precise approach, and the feasible function it has to play in the distribution of welfare positive aspects. One could also believe of it as a digital token that makes it possible for the beneficiary to avail a precise service/ item from pre-authorised service providers,” he added.
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As this distinct digital token does not call for a person to have a bank account or any distinct mobile app, it operates even for the non-smartphone utilizing population. With practically 80 per cent of the population in India getting mobile connection, e-RUPI might revolutionise the digital payment technique in the nation.
Explaining what is so revolutionary about it, Salot mentioned –
- The payments can be made by way of a QR code (smartphone customers) or an SMS string based e-voucher (non-smartphone customers). Traditionally, the non-smartphone population has struggled to adopt digital payments. This makes it possible for them to steadily use and accept digital strategies, which augurs properly for the years to come.
- The instrument can be goal precise. For instance, it could be for COVID vaccines at government centers. In such a situation – the advantage is accrued to the beneficiary only when they avail the service.
- In the conventional direct-advantage transfer to a bank account – it is feasible that the precise services have been not genuinely availed and the income was employed for other purposes. E-RUPI, if implemented and tracked properly, can have considerable implications for digital adoption, transparency, and social initiatives.
“It is in essence, a multi-party configuration for enabling digitisation of offline transactions. The sender (say, the Government of India) creates an e-RUPI which is sent to the beneficiary, but it needs to be simultaneously authorised by an intermediary (such as a bank). In the usual cash economy, once the cash is in the customer’s hand, the bank loses visibility of the end purpose. However, in the case of e-RUPI the bank knows the purpose, and authorises the redemption of this voucher against the same purpose. This brings in the next party – the service provider,” mentioned Salot.
“For example, rather than using the money elsewhere, beneficiaries may be prompted to avail the vaccine jabs. Similarly, a section of such benefits can be focused on education for children, low-cost healthcare administration, community development, and so on,” he added.
Salot points out the following positive aspects of e-RUPI that we can anticipate:
- Drive higher adoption of digital payments in a segment of population that has remained digital-immune.
- Better last mile delivery of welfare positive aspects is one of the greatest places, I am personally enthused about – be it education, nourishment, healthcare, and a lot more.
- Transaction transparency – money is an opaque instrument with no trails. All digital payment innovations market higher transparency. To that extent, e-RUPI ought to also.
- Reduced money utilisation, in particular when an institution is distributing positive aspects. This can have considerable adverse tailwinds for providers like Sodexo, if organisations use a portion of their kitty to challenge goal precise e-RUPI – such as understanding allowance on precise portals.
“These are exciting times in the Indian Fintech Ecosystem, and it’s great to see that the government has come up with a rather interesting fork to an accepted payment method, which allows even the hitherto non-digital customer segments to embrace digital payments,” mentioned Salot.
Explaining the distinction involving e-RUPI and cryptocurrencies, WazirX CEO Nischal Shetty mentioned, “e-RUPI is not like other crypto. It’s not based on blockchain but emphasises one of the core messages of blockchain-based tokens. It enables end-to-end digital transactions without any physical intermediary, leading to lesser operating costs.”
“Also, e-RUPI heralds data privacy and security, just like cryptocurrencies, as intimate personal details are not required during the redemption of vouchers. Overall, this bodes well for digitising India’s financial stack,” Shetty additional mentioned.