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How e-RUPI Works?

 It is a voucher-based system aimed to improve the efficiency and transparency of government welfare systems and other benefits.

What is e-RUPI?

The National Payments Corporation of India (NPCI) created e-RUPI, a digital voucher-based payment system. It primarily focuses on targeted welfare payments, allowing for the secure and direct transmission of money to beneficiaries without the need for a bank account.

Users can utilize this simple one-time payment option without a card, a digital wallet, or Internet banking to make purchases at establishments that accept UPI e-Rupi Vouchers. Organizations would deliver the e-RUPI to the receivers by SMS or QR code for a certain activity.

As it fully safeguards the beneficiaries' personal information, this contactless e-RUPI is straightforward, secure, and safe. Because the required amount is already included in the voucher, the entire transaction procedure is significantly faster and more reliable when utilizing this coupon.

What Benefits Of e-RUPI?

After explaining how and where to use e-Rupi, let us examine its numerous advantages. Among them are the following:

1. Low Costs of Transaction - You may settle your electronic payments without having to worry about ridiculous transaction expenses. Banks are not required to invest in separate settlement assurance infrastructure, so you, as a user, will not be required to pay any fees to the banks or intermediaries providing e₹services.

2. Secure Mode of Transaction - Carrying actual cash carries a number of concerns, including theft, counterfeit currency, and so on. The most notable advantage of e is that it is extremely secure. Because the transactions are encrypted from beginning to end, they are safer and more secure.

3. Low Settlement Risks - The RBI will consider electronic transactions to be final. This function reduces the requirement for interbank settlements by lowering settlement risks within the financial system. This is similar to UPI payment systems, in which digital currency is exchanged like cash rather than bank balances.

4. Financial Inclusion - People in rural India have little or no access to traditional financial services. They continue to face difficulties in participating in India's financial system. The RBI's e₹ launch aims to address this issue and take steps to integrate such people into the financial system.

5. Increased Efficiency and Liquidity - The use of e₹ has the ability to speed up financial transactions, making them more efficient. It eliminates the need to physically trade cash, as well as the requirement to wait for banks to clear cheques. You may also easily liquefy and scale your transactions.

The RBI is in an effort to enhance India's digital economy and make online transactions risk-free with the launch of the e₹. It will also reduce the requirement for payment networks and gateways. Once e₹ is available nationwide, you will be able to execute transactions conveniently, anonymously, and quickly.

How Does e-RUPI Work?

Using e-Rupi is similar to using cash, except that your cash will be in the form of an electronic token saved in your digital wallet. The following is how e-RUPI works:

  • Issuing e₹

The Reserve Bank of India will issue electronic tokens that can be swapped one for one. The denominations of e-Rupi will be the same as those now in circulation in the country.

The RBI will distribute the required number of tokens to Token Service Providers (TSPs), which are intermediaries. The banks will obtain the tokens from the RBI through TSP merchants. The issuing of Digital Rupees will take place entirely online. The RBI incurs no operating expenditures such as printing, holding, or delivering physical cash.

  • Acquiring e₹

The CBDC tokens will be available to customers through a digital wallet provided by the collaborating institutions. You can withdraw digital tokens from the bank just like you would cash. You can use the Unified Payment Interface (UPI) payment gateway to convert your cash holdings to your preferred e-Rupi. Some banks may permit immediate transfers from a bank account to a digital wallet.

The RBI maintains the integrity of your tokens by applying security measures such as cryptography and quantum computing-resistance technologies. To avoid token counterfeiting, each token will have a unique token number. In addition, if you lose your device, the wallet provider will be able to restore the complete value of your digital tokens.


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Abhinav Paliwal

Abhinav Paliwal


PayNet Systems- A Neo Banking Software Platform

Member since

26 May 2023



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