Unlike UPI, e-RUPI is a digital voucher that restricts where and how someone can spend money, but also stores data, which in turn raises concerns about financial monitoring.

On August 2nd, Prime Minister Narendra Modi took over started e-RUPI, a payment system based on the Unified Payment Interface (UPI). But what exactly is it and what is it supposed to do?

Why is it important? The National Payments Corporation of India is an amalgamation of public and private banks, and yet its systems are repeatedly under the auspices of the government (BHIM, UPI in Bhutan, Bharat Bill Pay Service), which gives it the appearance and advantages of a government-sponsored system. The dependence of the government and the private sector on e-RUPI-like systems can have far-reaching consequences, particularly in terms of the data collected and the possible exclusion that can follow as the instrument becomes more widespread.

The what and the how

What is e-RUPI and how does it work? “E-RUPI is basically a digital voucher that a beneficiary receives on their mobile phone in the form of an SMS or a QR code. It is a prepaid voucher that he / she can redeem at any center that accepts it, ”a government press release said.

What can e-RUPI be used for? In essence, e-RUPI is a meal-pass program like Sodexo – a tool for restricting where and how someone can spend money. For example, this could be an employer giving their employees e-RUPI vouchers for COVID-19 vaccines, or a hospital without an x-ray machine giving a poor patient a voucher for a scan at another facility. The last example was quoted by RS Sharma, the CEO of the National Health Authority, in an interview with NDTV; the NHA is the first organization within the Department of Health to have access to the tool.

How does e-RUPI differ from UPI? For starters, it has two more letters and a hyphen. Seriously, e-RUPI sits on top of UPI and runs on the same infrastructure. In contrast to transactions with UPI, developed by National Payments Corporation India, e-RUPI vouchers do not reveal the identity of the beneficiary to the merchant – this information remains with the issuing organization and the bank. Beneficiaries are not required to reveal their identity during redemption, the NPCI website says.

What is the difference between the RBI digital rupee and the e-RUPI? The Reserve Bank of India’s Digital Rupee is a so-called Central Bank-Backed Digital Currency (CBDC). It is equivalent to money itself and not an instrument to transfer it. The RBI has yet to decide on the details of how this CBDC will work and where to use it, but the problem it solves is completely different: T Rabi Sankar, Deputy Governor of the Reserve Bank of India, said it would open the public before the volatility of private cryptocurrencies (the purchase of which by Indians the RBI tried to limit, only to overturned from the Supreme Court.)

e-RUPI should not be confused with digital currency, which the Reserve Bank of India is considering. – Government press release

Where e-RUPI is accepted

Who is currently issuing e-RUPI vouchers? It’s a small number. “Initially, NPCI has worked with more than 1,600 hospitals where e-RUPI can be redeemed,” the government said in its press release, citing unnamed “experts” who said private companies would pick it up for B2B transactions. The hospitals are Pilot test e-RUPI as a vaccination voucher.

Which banks support e-RUPI and what do they require? According to the NPCI, the following banks listed in the table support the issuance and purchase of e-RUPI vouchers (“acquire” in this context refers to the merchant’s bank that accepts the transaction). At present, eleven banks can issue e-RUPI vouchers, and almost six banks support the purchase. Fees depend on the bank – Bank of Baroda fees between 2 and 20 rupees for the issuance of vouchers up to a value of 10,000 rupees.

Source: NPCI

What will change with e-RUPI

How does e-RUPI change direct payment transfers? Direct transfers of funds from the government use Aadhaar information to direct subsidies to beneficiaries’ bank accounts. e-RUPI limits this process by saying where exactly this money can be spent. Although this purpose limitation need not necessarily be used in all DBTs, the government can be zealous in disbursing funds for health insurance, for example. NHA CEO Sharma told NDTV that e-RUPI was not going to become restrictive, arguing that there are 3 billion UPI transactions every month and that these days “every” rehadhiwala has a QR code on his today thela“Which refers to pushcart providers. Apart from that, it will be important for the success of e-RUPI to have traders correctly – and abundantly – configured.

RS Sharma on the hesitation of traders: “No, the dealers won’t do that [refuse e-RUPI payments]“Sharma told NDTV. “The dealer knows that if I don’t take it [an e-RUPI payment], someone else takes it. The three most important things in India are cost, convenience and confidence. These are now available in the digital payment system. The cost is zero too, so obviously the dealer won’t pay anything, so it’s as good as cash for them! “

Are there any privacy concerns related to e-RUPI? The NPCI says that since e-RUPI does not have access to the beneficiaries’ personal details, “Secured and loaded“. But the system follows a growing trend that financial transactions are tied to a lot of data. Srikanth Lakshmanan, who frequently writes about payment systems in India, said that e-RUPI embeds “automatic data emission via” beneficiaries. “It turns a holder instrument like a postage stamp / coupon into a person / purpose-specific instrument,” said Lakshmanan. Without adequate privacy protection, such storage of data at different levels of the payment infrastructure can impact financial monitoring.

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