e-RUPI a futuristic milestone for the welfare state:

We all have heard of a famous remark by one of our former Prime Ministers that out of one rupee spent on the welfare of the people, in actual only fifteen paise reaches the end beneficiary. Probably the Aadhar Scheme has been one of the benchmarks along with the DBT framework, which now supports 420+ schemes and 56 ministries. On the lines of improving the last mile delivery of the transparent and cashless benefit in the current scenario of digital governance, e-RUPI launched last year by National Payments Corporation of India, seems to be an important milestone. It has been developed in collaboration with the Department of Financial Services, Ministry of Health & Family Welfare and National Health Authority. The e-RUPI is a cashless, contactless, and purpose-specific payment instrument that can be used by individuals, corporates, or governments for making digital payments. It is also a safe and secure payment instrument as it keeps the beneficiary’s information completely confidential.

What is e-RUPI?

e-RUPI is basically a digital voucher that a beneficiary gets on his mobile phone as an SMS or QR code for a specific purpose or activity. It is a pre-paid voucher, which he/she can redeem at the specific merchant that accepts it.

For example, if the Government wants to cover a particular treatment of an employee in a specified hospital, it can issue an e-RUPI voucher for the determined amount through a partner bank. The employee will receive an SMS or a QR Code on his feature phone/smartphone. He/she can go to the specified hospital, avail of the services, and pay through the e-RUPI voucher received on his/her phone.

It is a one-time contactless, cashless voucher-based mode of payment that helps individuals redeem the e-RUPI voucher without a card, digital payments app, or internet banking access. Around 11 Banks are live with e-RUPI issuance currently.

Can e-RUPI reduce the digital divide?

The key difference of this medium is that it does not require the beneficiary to have an account or the smartphone or the internet connection. The voucher code can be received on the simple feature phone as a SMS and can be redeemed by the service provider.

Though the smartphone availability and internet usage has been growing in the small towns & rural villages of India, a digital divide still exists. The e-RUPI can bridge this gap and also expand the access to the welfare schemes at the same time increasing the delivery of benefits to the actual beneficiary.

Recent use case and future scope

The Karnataka government was one of the first to initiate e-RUPI disbursement for its Education Scholarship. In Dec 2021, National Payments Corporation of India (NPCI), State Bank of India (SBI), and Department of e-Governance, Government of Karnataka formed a partnership for enabling and implementing e-RUPI as a cashless and contactless payment solution for the students under the State scholarship program.

e-RUPI was used to ensure a leak proof delivery of education fee to eligible students by paying digitally to the college / institute by the Karnataka Government. The e-vouchers were delivered to the mobiles of eligible students. The voucher code could be received on the feature phone also. The students were then able to redeem e-RUPI at the identified colleges / institutes for the intended purpose of fee payment.

This successful pilot has paved way for many more use cases across various schemes now. Also as there is no physical form factor or any intermediary, it will also lead to cost savings for the scheme/benefit sponsor and assurance of real time payment for the service provider.

Is e-RUPI same as crypto currency ?

One should not be confusing this voucher type currency with crypto currency. Right now e-RUPI is a digital prepaid voucher for a fixed amount & specific use that is paid for by the government. Initially, e-RUPI will be used for passing on welfare subsidies & other citizen benefits. This is more like the Central Bank Digital Currencies or CBDCs with the only similarity it draws is in terms of removal of any physical intermediary.

Government push for the initiative

Recently in February, the government increased the voucher limit from Rs. 10,000 to Rs. 1 lakh. Also, the single time use of the voucher, which was a limitation, has been changed to multi-use. The government & the ministries seem to be innovating use cases for this voucher-based currency. All these moves will likely attract increased & diverse use ranging from corporate gifting to funding for a social cause. Experts say that Corporates will experiment on this while providing employee benefits and MSMEs will be adopting it for Business to Business (B2B) transactions.