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Post at: Aug 17 2021

E-Rupi Digital Payment Solution

Recent Context

  • On August 2, 2021, the Prime Minister of India launched E-Rupi, a person and purpose specific digital payment solution.

About E-Rupi

  • E-Rupi is a cashless and contactless instrument for digital payments.
  • It is a QR code or SMS string - based E-Voucher, which is delivered to the mobile of the beneficiaries.
  • It has been developed by National Payments Corporation of India on its UPI platform, in collaboration with the Department of Financial Services, Ministry of Health & Family Welfare and National Health Authority.

How will E-Rupi work ?

  • It 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
  • It also ensures that the payment to the service provider is made only after the transaction is completed.

What are the Use Cases of E-Rupi?

Significance of E-Rupi

  • The government is already working on developing a central bank digital currency and the launch of E-Rupi could potentially highlight the gaps in digital payments infrastructure that will be necesary for the success of the future digital currency.
  • E-Rupi is formally backed by the Indian currency as an underlying asset, thus distinguishing it from virtual currencies.
  • The ubiquitousness of E-Rupi in the future will depend on the end-use cases.

Global Examples of a Voucher-Based Welfare System

  • In the United States, there is a 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.
  • These are essentially subsidies given directly to parents of students for the specific purpose of educating their children.
  • The school voucher system has been used in several other countries such as Colombia, China, Sweden, Hong Kong etc.

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