PM Modi Launches E-RUPI: An Exciting New Digital Payment Mode; How Does It Work? USPs?

PM Modi has launched e-RUPI, an electronic voucher-based digital payment system.

 e-RUPI has been developed by the National Payments Corporation of India (NPCI), Department of Financial Services, Ministry of Health and Family Welfare and the National Health Authority.

This is a person and purpose-specific payments system.

The concept utilises modern technology and IT tools to ensure faster delivery of funds and more accurate targeting of the recipients.

 e-RUPI gets delivered to mobile phones of beneficiaries via an SMS-string or a QR code.

What Is This?

It can be likened to a prepaid gift-voucher such as Sodexo vouchers that can be redeemed at specific accepting centres.

Since it is an electronic coupon and unrelated to any app or mobile banking, it can be accessed without requiring any credit or debit card, a mobile app or internet banking. 

Through the platform, the sponsors of the services are connected to the beneficiaries and service providers without needing any physical interface.

Banks including private and public sector have been brought onboard which will be the issuing entities.

How It Works 

Any private or govt agency will approach these banks and provide them the details of specific persons and the purpose of the payment issued to them.

These persons or beneficiaries will be identified using their mobile number and will get a voucher issued by the bank via SMS or QR Code.

This is different from the convention of putting the cash in bank accounts.

Its Benefits

 e-RUPI has been developed with the objective of a leak-proof delivery of welfare services.

It removes the need for middlemen and eliminates involvement of direct cash.

This would serve to minimise fraud and corruption.

Uses

Uses include delivery of services under Direct Benefit Transfer (DBT) schemes such as:

• Those 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
• Fertiliser subsidies, etc

The corporate sector can also use the platform for employee welfare and corporate social responsibility programmes.

As it does not require physical issuance, it will help towards a firm’s cost reduction plans.

Those issuing the voucher can also track its redemption, which is another advantage.

Significance For The Economy And The Poor

 e-RUPI can address the gaps in digital payments infrastructure that will be necessary for the success of the future digital currency.

It is still backed by the existing Indian rupee as the underlying asset.

It is different from a virtual currency due to the specificity of its purpose which ensures that the benefit is being used for that purpose alone and not anything else.

This also helps the large proportion of the Indian population that remains unbanked and has limited internet access.

Banks Supporting e-RUPI

Currently, 11 public and private sector banks support this new digital payment mode.

The banks include:

• State Bank of India 
• ICICI Bank
• HDFC Bank
• Punjab National Bank
• Axis Bank 
• Bank of Baroda

Both issuance and redemption of e-RUPI coupons can be done at these banks.

The issuance of these coupons is not dependent on bank account details of the beneficiary.

The following banks can issue e-RUPI coupons but they cannot be redeemed there:

• Canara Bank
• IndusInd Bank
• Indian Bank
• Kotak Mahindra Bank 
• Union Bank of India

Some Industry Reactions:

Avinash Shekhar, Co-CEO of ZebPay said,‘’We are glad to see e-RUPI which is a great way to implement person and purpose specific digital transactions. We are also looking forward to seeing the features of central bank digital currencies and how they will work. These are great steps towards forming a complete digital economy that have their own unique roles. We believe crypto assets, along with these innovations like e-RUPI and digital currencies, can co-exist in the digital Indian economy.’’

Dilip Modi, Founder, Spice Money, said, “The launch of e-RUPI is a landmark move by PM Modi to bring technology into the hands of billions, specially at the last mile. There have been many conversations around ensuring leak-proof welfare to beneficiaries by leveraging new-age tech, however, the launch of e-RUPI today makes India a global pioneer in the digital payments ecosystem. With the pandemic, the growth of the fintech sector, particularly digital payments, has been at rocket-speed. Now, with this new contactless, cashless digital payments platform, this growth will be further accelerated, specially in rural India, where most Direct Benefit Transfers are witnessed. Spice Money has been one of the most vocal supporters of tech in payments and we wholeheartedly welcome this initiative, that will further the vision of financial inclusion for all.”

Rajesh Mirjankar, MD & CEO, Infrasoft Technologies Ltd said, “The e-RUPI initiative is an innovative model of enabling digital transactions through voucher QR codes and links through both smartphones and feature phones without an intermediary or a bank account. We are proud to be associated with the e-RUPI initiative through our client banks. NPCI has been at the forefront of digital innovation for payments in India and we are pleased to be offering the entire NPCI product stack through our products to our client banks.”

Mr Bharat Panchal, CRO – APAC, Middle-east and Africa, FIS said, “The new digital payment mode– e-RUPI– is basically a prepaid voucher that can be issued directly to citizens after verifying mobile number and identity. e-RUPI voucher will be delivered in the form of a QR code or SMS string-based e-voucher to the beneficiary’s mobile number.

The beneficiary can redeem the voucher without a card, digital payments app or internet banking access, at the service provider. This would be very useful instrument for those who are not privy to use to the digital platform yet the government can extend monetary support in digital form directly to citizens in a “leak-proof manner” in the form of prepaid e-voucher powered by UPI.

However, some stronger controls may be required to monitor any possible frauds. If real beneficiary starts encashing such vouchers in lieu of cash than it would be difficult to trace such pre-paid instruments once it start to move from one hand to other. Therefore , It would be very effective to match the beneficiary’s details at the time of redemption to make sure that real beneficiary only is using it and not someone else.”

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