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- Keerthana G (Editor), Arun Jacob (Editor-in-Chief)
Have you ever noticed how Amazon, the e-commerce giant, issues gift vouchers to its customers that can be redeemed only for certain products and only in the Amazon app? Typically, any gift voucher issued by these stores to attract customers is a smart way that the store uses to ensure that the money offered through these vouchers is redeemed only in their store and only for a specific purpose.
Well, if you know how this concept works, you are certain to understand all the buzz around the new E-RUPI digital platform and its applications.
What is E-RUPI?
Being a cashless and contactless medium of payment, E-RUPI is a platform that was launched by the Prime Minister of India and developed by the National Payments Corporation of India (NPCI) Department of Financial Services, Ministry of Health and Family Welfare, and National Health Authority.
To put it in simple terms, it is a voucher-based payment mechanism wherein, a pre-paid voucher issued to the beneficiary for a special purpose can be redeemed by him through an SMS or QR code sent to him via his mobile number. This pre-paid voucher can be availed by the beneficiary without the need for any credit card, debit card or net banking facilities. E-RUPI aims at establishing a connection between the Sponsors and Beneficiaries without the need for physical interfaces.
As mentioned in the example above, these vouchers which are typically issued by the government to the beneficiaries to avail certain benefits such as health care facilities, nutritional assistance, vaccines, children and women welfare schemes can now be tracked to ensure that the money issued for a specific purpose is only used towards that purpose and that specific location by the beneficiary.
Let us assume, the government provides you with a pre-paid voucher to take your vaccine free of cost. This voucher can be presented only at vaccination centres and can be redeemed only for the purpose of vaccination. This has helped solve the age-old problem prevailing in the country concerning welfare scheme money being used for other purposes. Through this app, the government can also have a record of the number of people that benefitted from using the voucher and ensure that they used it for the purpose it was issued. The Government can use this app to aid its various welfare schemes such as Ayushman Bharat, fertilizer subsidies, Pradhan Mantri Jan Arogya Yojana and so on.
A lot of people may get E-RUPI confused with Central Bank Digital Currencies (CBDC) but they have completely different ways of working. Central Bank Digital Currencies are considered as electronic cash that give the holders a right to claim an amount from the central bank. This is different from credit/debit cards as they are issued by commercial banks and the government does not normally insure the entire amount. This is different from cryptocurrencies as well, and looks to benefit people by increasing security of the transactions and provide more efficiency.
How will it be issued?
Under the system built by the NPCI, several banks such as Axis Bank, Bank of Baroda, HDFC Bank, ICICI Bank and Punjab National Bank act as issuers and acquirers of E-RUPI vouchers. Other banks like Indian Bank, Union Bank of India and Canara Bank would only act as issuers of the digital voucher facility. Any government agency or corporate entity can instruct the banks to send an E-RUPI voucher and provide them with the details of the beneficiary. The bank allocates the voucher to the beneficiary’s mobile number and it can be redeemed only by him.
This facility can soon be availed by corporates as well as individuals like you and me where pre-paid vouchers can be issued by individuals or corporates to specific individuals that can be used for a set purpose.
How E-RUPI really benefits the people and what are the demerits?
According to Prime Minister Narendra Modi, the benefits of this particular service could be limitless. Since UPI payments are being used almost everywhere in the country, the people have already got used to the process. Acting as a prepaid voucher, E-RUPI strengthens the implementation of transparency and prevents any filching from the government provided subsidies and incomes. As it is received in the form of a QR code, as a text message, the beneficiary cannot cash the voucher at any bank and use the benefit for other purposes. E-RUPI has directly made the process of Direct Benefit Transfer (DBT) more efficient. Do not confuse it with the process of each, as Direct Benefit Transfer aims at government subsidies being provided to the beneficiary into their bank accounts, unlike E-RUPI that uses UPI to send the subsidies directly to the beneficiary’s phone as a text message. Digital India stated, “It can also be used for delivering services under schemes meant for providing drugs and nutritional support”.
For security purposes, the beneficiaries will have their Aadhar linked to their mobile number, keeping their information completely confidential. Even while redeeming the voucher, beneficiaries need not provide any sort of details that reveal their identity. In detection of misuse or fraud, it can be traced back to the person responsible. There will be no intermediaries involved this process, making it easier. The main success factor of this app is its leak-proof payment mechanism, the redundancy of smartphones, internet facilities, and a bank account.
There are certain demerits to keep in mind, with the implementation of this digital payment solution. According to a recent Data Intelligence Report, only 78% of the country population have mobile network connections, and the other 22% have to be excluded from this service until they are provided with suitable network resources. Mobile connections also experienced a drop of 1.4% during the pandemic, causing reduced cellular network speeds.
A new vision to digital payments?
This is one of the first steps by the Indian Government in bringing the e-voucher system to the country. The Government over the past years have taken up many initiatives in order to standardize digital payments in India. With 2.3 billion transactions occurring through UPI, as on February 2021, there has been a 70% overall transaction growth volume. This can only be considered as one step closer towards an important goal of digitalizing all payments by 2030. This is one of the first steps by the Indian Government in bringing the e-voucher system to the country, improving the overall vision towards this goal.
A jump further towards digitality, Let us see how it goes shall we?
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