e-RUPI and how does it work? Detailed

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What is e-RUPI ?

  • e-RUPI is a digital payments medium launched by the government of India on 2nd Aug 2021.
  • E-RUPI is a cashless and contactless system in which benefits will be delivered to the mobile phones of beneficiaries in form of an SMS string or a QR code.
  • It is similar to the prepaid gift-voucher system that will be redeemable at particular specified accepting centres, beneficiary just need to show the SMS or QR Code to avail the benefits without requiring any credit or debit card, a mobile app or internet banking.
  • e-RUPI will link the sponsors of the services to the beneficiaries and the service providers in a digital manner without any physical interface.
  • The platform has been developed by the National Payments Corporation of India (NPCI)Department of Financial Services, Ministry of Health and Family Welfare and the National Health Authority and it will be a person-specific and purpose-specific payments system.

How e-RUPI vouchers will be issued?

  • The system has been designed by NPCI on its UPI platform, and has onboarded banks that would be the issuing entities.
  • Any company or government agency will have to approach the companion banks, which are both private and public-sector lenders, with the details of particular persons and the purpose for which payments should be made.
  • The beneficiaries shall be recognized utilizing their mobile number and a voucher allocated by a bank to the service provider within the identify of a given individual would solely be delivered to that individual.
  • A QR code or SMS-string will be despatched to the beneficiary, and they will have to show it to the welfare service provider for the transaction to be complete. No printouts would be required. As these vouchers are created for a particular function, they can’t be transferred or cashed out.

How e-RUPI will be utilised?

  • According to the government, e-RUPI is expected to make sure a leak-proof supply of welfare services.
  • It may also be used for delivering services under schemes meant for providing drugs and dietary support under Mother and Child welfare schemes, TB eradication programmes, drugs & diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertiliser subsidies and so on.
  • The government also stated that even the private sector can leverage these digital vouchers as a part of their employee welfare and corporate social responsibility programmes.
e-RUPI

Is e-RUPI a digital currency?

  • No, e-RUPI is designed for specific transactions and for services availed at a particular welfare centre.
  • The digital e-RUPI vouchers are backed by the Indian currency rupee and are also not transferable. All these characteristics place e-RUPI inside the framework of a voucher-based payment system rather than a digital currency, which has a distinct character.

Other international examples of a voucher-based welfare system?

  • Within the US, there is the system of education vouchers or school vouchers, which is a certificate of government funding for students chosen for state-funded education to create a focused delivery system. These are basically subsidies given straight to parents of students for the specific objective of educating their children.
  • Along with the US, the school voucher system has been utilized in a number of different countries such as Colombia, Chile, Sweden, Hong Kong, and so on.

National Payment Corporation Of India

  • National Payment Corporation of India is an organisation that is liable for operating retail payments and settlement systems of India.
  • It was started by the Reserve Bank of India and the Indian banks’ association.
  • Works under the provision of Payment and Settlement Systems Act 2017 so as to create strong payment and settlement infrastructure in India. 
  • A non-profit organisation that works under the powers of section 8 of the Companies Act 2013. 
  • NPCI is also liable for maintaining the infrastructure for the banking system in India to facilitate physical and electronic payment and settlement systems in India by means of the use of technology.
  • National Payment Corporation of India brings innovation within the payment system of India by utilising technology.
  • Its promoter is SBI, PNB, Bank of Baroda, Canara Bank, UBI, Bank of India, ICICI bank, HDFC bank, Citibank and HSBC.

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