India @ 75: e-RUPI, India's giant leap into digital tokens explained

India at 75 is set to revamp its welfare distribution system, from the 'ek anna' era to the e-RUPI ecosystem. Here is all you need to know about the latest in digital payment systems.

What is e-RUPI?

e-RUPI is a cashless and contactless instrument for digital payment. It is a purpose and person-specific mode of payment that would be a hybrid version of digital currency and voucher. e-RUPI has been developed by the National Payments Corporation of India (NPCI), the Department of Financial Services, the Ministry of Health and Family Welfare and the National Health Authority.

How will it work?

It will be a QR code or SMS-based e-voucher that would be delivered to the beneficiary directly. A corporate or a government agency will have to contact a partner bank that will issue the voucher. The voucher will then get delivered to the beneficiary's mobile phone which can be redeemed at a specific centre or for a specific purpose. These vouchers are like prepaid e-gift cards. For eg: If an e-RUPI voucher has been issued for Covid vaccine, it would be used for the same purpose.

Why e-RUPI?

According to the government, e-RUPI is a revolutionary initiative in the direction of ensuring a leak-proof delivery of welfare schemes. It ensures timely payment to the service provider without the involvement of any intermediary. More than 17 lakh crore transferred under DBT till now.

What are its uses?

It can be used for delivering services under several government welfare schemes. The government also said that even the private sector can leverage these digital vouchers as part of their employee welfare and corporate social responsibility programmes.

Is it better than DBT?

While the DBT scheme requires the beneficiaries to have a bank account, the e-RUPI system will not require users’ bank account details. The only requirement is for the beneficiary’s mobile phone number.

How is e-RUPI different from the digital currency?

As the government is on the verge of launching its digital currency or CBDC, e-RUPI could be considered as something in between a digital currency and the historic voucher system. Even though both are contactless and totally digital, e-RUPI is developed to fulfil a specific purpose, while spending of digital currency would be at a holder's discretion.