Taking high-end technology to the bottom of the pyramid, simply put, e-RUPI will help the Government pass on economic benefits to the last mile-user without him requiring to have a bank account, while also checking use of the funds other than the intended purpose.
Even the unbanked population can benefit from the government delivery system intended to benefit specific persons for a specific purpose.
What is e-RUPI
Launched last week by Prime Minister Narendra Modi, e-RUPI is a cashless and contactless digital payment solution, aimed at making Direct Benefit Transfer (DBT) more effective in digital transactions in the country.
It is a pre-paid digital voucher which a beneficiary gets on his phone in the form of an SMS or a QR code, which he/she can redeem at any centre that accepts it, without a card, digital payments app, or internet banking access.
The voucher is authorized via a verification code, is hassle-free and contactless as handling of cash or cards is not required and quick due to a pre-blocked amount, with lesser chances of decline.
Beneficiaries don’t need to share their personal details while redemption, hence their privacy is maintained; however, the voucher offering authority needs to ensure that it isn’t misused.
Why it will work
Since e-RUPI does not require the beneficiary to have a bank account, which is a key differentiating factor as compared to other digital payment forms, it will see higher adoption rate in rural and distant areas that will help government to deliver welfare schemes required by the marginal sections of our population.
Considering that the consumer redeeming the voucher need not have a digital payment app or a bank account, e-RUPI overcomes the limitations of the Direct Benefit Transfer (DBT) system which requires the trinity of JAM (Jan Dhan account, Aadhaar and Mobile) as enabler, i.e. various government financial, healthcare, and welfare schemes and benefits can be availed even without having a bank account.
India has around 314 DBT schemes across 54 ministries, which saw Rs 5.52 lakh crore being transferred through 603 crore transactions in 2020-21, while so far in the current financial year Rs 1.28 lakh crore has been transferred across 155 crore transactions.
The voucher issuing entities would be banks and payment services providers holding licenses for such pre-paid instruments like e-RUPI.
Employers willing to provide certain benefits to their employees in a cost-effective manner, can also offer e-vouchers like the e-RUPI.
For instance, a person receiving an e-RUPI vaccination voucher on his phone, has to produce it at a vaccination centre listed with the National Payments Corporation of India (NPCI) to avail free vaccination. Since the voucher is prepaid, it reduces the processing time as the required amount is already stored in the voucher.
The best benefit of e-RUPI is that money can be used only for the intended purpose for which it is issued that can arrest leakages, if any. Moreover, looking at the larger picture, the launch of e-RUPI could be a step towards forming a complete digital economy and the evolution of crypto assets and digital currencies, that can co-exist in the digital Indian economy.
(Rupa Naik is Executive Director, MVIRDC World Trade Center Mumbai)
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