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