e-RUPI

e-RUPI

Subject: Economy

Context: Taking the first step towards having a digital currency in the country, Prime Minister Narendra Modi will launch an electronic voucher based digital payment system “e-RUPI” Monday.

Concept:

• e-RUPI is an electronic voucher based digital payment system.
• The platform 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, will be a person-specific and purpose-specific payments system.
• e-RUPI is a cashless and contactless digital payments medium, which will be delivered to mobile phones of beneficiaries in form of an SMS-string or a QR code.
• This will essentially be like a prepaid gift-voucher that will be redeemable at specific accepting centres without any credit or debit card, a mobile app or internet banking.
• e-RUPI will connect the sponsors of the services with the beneficiaries and service providers in a digital manner without any physical interface.
• The system has been built by NPCI on its UPI platform, and has on boarded banks that will be the issuing entities.
• Any corporate or government agency will have to approach the partner banks, which are both private and public-sector lenders, with the details of specific persons and the purpose for which payments have to be made.
• The beneficiaries will be identified using their mobile number and a voucher allocated by a bank to the service provider in the name of a given person would only be delivered to that person.

How will these vouchers be issued?

• The system has been built by NPCI on its UPI platform, and has onboarded banks that will be the issuing entities.
• Any corporate or government agency will have to approach the partner banks, which are both private and public-sector lenders, with the details of specific persons and the purpose for which payments have to be made.
• The beneficiaries will be identified using their mobile number and a voucher allocated by a bank to the service provider in the name of a given person would only be delivered to that person.

What are the use cases of e-RUPI?

• e-RUPI is expected to ensure a leak-proof delivery of welfare services.
• It can also be used for delivering services under schemes meant for 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 government also said that even the private sector can leverage these digital vouchers as part of their employee welfare and corporate social responsibility programmes.

How is it different from a digital currency?

• e-RUPI is still backed by the existing Indian rupee as the underlying asset and specificity of its purpose makes it different to a virtual currency and puts it closer to a voucher-based payment system.

Are there global examples of a voucher-based welfare system?

• In the US, there is the system of education vouchers or school vouchers, which is a certificate of government funding for students selected for state-funded education to create a targeted delivery system.
• In addition to the US, the school voucher system has been used in several other countries such as Colombia, Chile, Sweden, Hong Kong, etc.