Launched in August 2021 by Prime Minister Narendra Modi, e-RUPI is a new digital payment solution for seamless transfer of funds, without the need for any card, digital payments app, internet access or even a bank account. 

e-RUPI is a cashless and contactless payment method done through an e-voucher sent to beneficiaries via QR Codes or SMS strings, which can be redeemed/used for specific purpose only, at the service providers. It connects the sponsors of the services with the users and service providers digitally, with no physical interface required.

These vouchers will be both person and purpose/end-use specific, for ex: If they are issued by government for availing any medical service at a particular hospital, then they can be redeemed only for that. In other words, it will work as a closed system PPI.

How e-RUPI works?

e-RUPI is developed by NPCI on its UPI platform, with onboarded banks as the issuers. The government or any private corporate will approach the partner banks with the details of specific beneficiaries to whom the payments have to be made and the purpose of such payments.

Each beneficiary will be uniquely identified basis their mobile number and voucher will then be issued and delivered (in the form of QR Code/SMS) in the name of that beneficiary only. 

Objective of e-RUPI

e-RUPI is expected to serve the following objectives:

• The long-term vision of e-RUPI is to reach the unbanked population, include them into a formal financial system and reduce the digital gap in the country
• To provide an equal access to various healthcare, education, and other benefits to each citizen of the country
• Transparency in transactions, as the end-use of the funds can be easily tracked
• Will guarantee that the money is used for the purpose for which it was intended, unlike traditional bank account transfer where it is possible that the funds are used for other purposes

Further, with the government in the process of establishing a digital currency for the Central Bank, e-RUPI can be used to emphasize the flaws in the current digital payment infrastructure which is crucial for the development of digital currencies in future. 

Application of e-RUPI

Currently, this is a platform launched as a government initiative for leak-proof distribution of welfare benefits to eligible beneficiaries. It aims to provide services under various schemes of the government including Ayushman Bharat Pradhan Mantri Jan Arogya Yojana and other subsidy programs, etc. 

However, in future even private entities can use this voucher-based payment method for providing services to their employees for travel, healthcare, and other such purpose-specific expenses.

It can also be used to provide credit to first-time borrowers, where the end-use of funds is specific and thereby evolving the digital lending landscape in the country.

A move towards digitalization and introduction of Digital Currency

While e-RUPI is in itself not a digital currency, as it is still backed by Indian Rupee as the underlying asset and is purpose specific, it is definitely a move towards introducing digital currency/cryptocurrency in India.

Both e-RUPI and cryptocurrency work on similar principle of enabling end to end digital transactions and removing physical intermediaries thereby ensuring transparency, data security and overall reduction in operating costs. 

What lies ahead?

With the introduction of e-RUPI, it is clear that the government is in support of new digital initiatives, as they expect that India has tremendous potential to change the way they transact and pay for different services. This is supported by increasing adoption of digital payments for small-value transactions, especially by the non-digital customer segment in the country.

This backed by India’s high currency to GDP ratio, validates that such digital initiatives and crypto assets/digital currencies can co-exist and position India as the front runner towards forming a complete digital economy. Further, e-RUPI will encourage the use of PPIs in India for better channelization & monitoring of funds, providing an opportunity for Fintechs driving digital payment solutions to design new products build around e-RUPI/digital currencies and such kind of digital solutions.

India has experienced a remarkable evolution in its digital payment landscape in recent years. The swift proliferation of smartphones, internet connectivity, and government initiatives such as Digital India, Unified Payments Interface (UPI) NEFT/IMPS, Prepaid Cards/Wallets/Contactless Payments, e-RUPI, CBDC, AEPS, Open Banking/API Integration has significantly contributed to the expansion of digital payment methods throughout the nation. A strong tailwind to digital/contactless payments was provided by demonetisation and Covid-19, leading the way for a cashless economy and better tax compliance. This blog explores the latest digital payment trends reshaping India’s financial landscape.

Unified Payments Interface (UPI) Dominance

The Unified Payments Interface (UPI) has been a game-changer in the Indian payments industry. Launched in 2016 by the National Payments Corporation of India (NPCI), UPI enables users to link multiple bank accounts and execute real-time peer-to-peer transactions. UPI has witnessed exponential growth, with transaction volumes crossing the billion-mark monthly. Its success can be attributed to its simplicity, security, and interoperability across various payment apps.

IMPS/NEFT

IMPS and NEFT have revolutionised the way funds are transferred in India, providing individuals and businesses with fast, secure, and convenient payment options. Whether you need to send money urgently or make routine payments, these electronic funds transfer systems offer unparalleled accessibility and flexibility.

Prepaid Cards, wallets and Contactless Payments

Digital wallets and Prepaid cards have gained significant traction in India, allowing users to store funds digitally and make quick payments. The COVID-19 pandemic further accelerated the need for contactless transactions and contactless payments. NFC-enabled cards, QR code payments, and mobile payment solutions are increasingly prevalent, allowing consumers to make secure transactions without physical contact. Today, merchants are offering contactless payment options to provide their customers with a safer and more efficient checkout experience.

New Government Initiatives:

The Government of India has played a pivotal role in promoting digital payments through its flagship initiatives, such as Digital India, e-RUPI, CBDC and many more. Digital India aims to transform India into a digitally empowered society by promoting digital literacy and providing digital infrastructure.

o e-RUPI is a wholly cashless and no-contact electronic payment instrument that will be delivered to beneficiaries’ mobile devices (even mobile devices that are non-android or iOS) as either a QR code or an SMS-based e-voucher.

o CBDC is a digital currency issued by a central bank, rather than a commercial bank. Backed by blockchain technology, this central bank digital currency (CBDC) is an electronic version of the physical rupee, potentially representing a more secure and government-supported alternative to private digital currencies

AePS

India has witnessed rapid growth in biometric authentication for digital payments. The Aadhaar-enabled Payment System (AEPS) allows individuals to link their bank accounts with their unique Aadhaar identification number and make transactions using biometric verification. This technology has simplified payments for the underbanked population, making financial services more accessible and inclusive.

Integration of Artificial Intelligence (AI) and Machine Learning (ML)

Artificial Intelligence (AI) and Machine Learning (ML) are revolutionising the digital payments landscape in India. With AI-powered chatbots, payment service providers are enhancing customer support to address queries effectively. ML algorithms are leveraged to detect and prevent fraudulent activities, ensuring secure transactions. Moreover, personalised recommendations and targeted offers based on user behaviour are being utilised to drive customer engagement and loyalty.

Open Banking, driven by the Reserve Bank of India (RBI) guidelines, is a game-changer in the banking sector, allowing secure sharing of customer data between banks and fintech companies. Application Programming Interfaces (APIs) facilitate the seamless integration of various financial services, allowing customers to access multiple banking services through a single platform. This collaborative ecosystem encourages innovation and empowers customers with a variety of payment options.

As India moves towards a cashless economy, these trends will continue to shape the future of digital payments, driving financial inclusion and economic growth.

CARD91 is an API-led issuance Platform-as-a-Service company. It offers unparalleled technology infrastructure to banks, SMEs, corporates & fintech through its Switch and Card Management Solutions for Prepaid Cards, Multi-Currency Travel Cards and allied systems like Centralised System of Records (C-SOR) for prepaid cards, credit cards and Access Control systems (ACS)