Explainer: What is e-Rupi, how does it work and who benefits?

Source :Sify
Author :Finance Desk
Last Updated: Wed, Aug 4th, 2021, 01:23:19hrs
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Prime Minister Narendra Modi has unveiled the e-Rupi system. e-Rupi is expected to act as a replacement to cash. The Prime Minister in his address shared examples of how the system could be used.

e-Rupi could be used by organizations of all shapes and sizes as well as individuals. The use-cases could be as simple as buying a vaccination at a hospital or paying for poor people. The government subsidies on education, agriculture and nutrition could also be routed via e-Rupi system.

According to PM Modi, the eRUPI voucher will play a huge role in making DBT more effective in digital transactions. He said, "This will help everyone in targeted, transparent and leakage free delivery. He said e-RUPI is a symbol of how India is progressing by connecting people’s lives with technology. He also expressed happiness that this futuristic reform initiative has come at a time when the country is celebrating the Amrit Mahotsav on the  75th anniversary of independence."

With that, let us look at understanding e-Rupi and how you can benefit from it.

What is e-Rupi?
e-Rupi can be summarized in simple terms as a digital payment voucher.

The e-Rupi interface is the brainchild of the Department of Financial Services, the National Payments Corporation of India, the National health authority, Ministry of Health and Family Welfare and select partner banks.

e-Rupi does not need a smartphone, a digital payments app, a card, or even internet banking. The system runs from SMSes and QR codes. However, the system is secure, contactless, and claims of keeping user data confidential.

The users of this seamless one-time payment mechanism will be able to redeem the voucher without a card, digital payments app or internet banking access, at the merchants accepting e-RUPI. e-RUPI would be shared with the beneficiaries for a specific purpose or activity by organizations or Government via SMS or QR code.

How does it work?:
The e-Rupi system can be compared to a prepaid gift-voucher or even a Sodexo meal voucher that many corporate agencies offer their employees. An issuer bank raises a voucher in specified denominations. This voucher can be purchased by entities and individuals. An acquiring bank accepts the voucher and completes the transaction. 

In the case of a Sodexo voucher, one gets the option of shopping for products at several kiosks. These kiosks are the retail partners to Sodexo. Something similar works in the case of e-Rupi -- merchant activities. The e-Rupi voucher can be used at such merchant stores as well, although an exact list of shops or ecommerce stores is yet to be announced.

Who gets to benefit? 
According to the NPCI website, the e-Rupi system has immense benefits for corporate and hospitals. Vouchers given by Corporates can offer employee well-being. Since this is a digitally issued voucher, the entire process is taken care of digitally. It is safe and contactless. 

For hospitals, this is a easy and secure way of payment. Authorization is done via a verification code. Compared to a credit card e-Rupi can be redeemed in few steps. 
For consumers the benefits are as follows:

  • No need to have a bank account. 
  • Beneficiary need not share personal details. 
  • This involves a 2 step redemption process. 
  • Completely digital and customers need not carry print out of the voucher.

Banks & Acquiring apps offering e-RUPI
At the moment the State Bank of India, Punjab National Bank, Axis Bank, Bank of Baroda, HDFC and ICICI Bank are offering both issuance and acquiring services related to e-RUPI. Canara Bank, IndusInd Bank, Indian bank, Kotak Bank, and Union Bank of India are offering only issuance services. 

Bharat Pe, BHIM Baroda Merchant Pay, HDFC Business App, Pine Labs, PNB Merchant Pay, and SBI Yono Merchant are some of the interfaces from acquiring banks. 

NPCI has said that it would connect the acquiring and issuing banks and empower a secure and leak-proof delivery mechanism. Consumers who are offered the e-Rupi voucher may have to reach out to their banks to deposit the money into their accounts. They could also reach out to acquiring banks to check on ways to use the voucher. 
More banks are expected to join India's e-Rupi system.

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