An new digital currency christened "e-RUPI" has been introduced by the National Payments Corporation of India (NPCI) in collaboration with the Department of Financial Services (DFS), the National Health Authority (NHA), the Ministry of Health and Family Welfare (MoHFW) and partner banks. This Central Bank Digital Currency (CBDC) is a digital representation of RBI-issued banknotes. In order to test digital currency in India, the Reserve Bank of India announced that it would shortly start the pilot launch of the e-rupi for particular use cases.
“As the extent and scope of such pilot launches expand, RBI will continue to communicate about specific features and benefits of e-rupi, from time to time" - RBI concept note on Central Bank Digital Currency (CBDC).
Users of this convenient one-time payment method will be able to redeem the voucher at businesses that accept e-RUPI without a card, a digital payment app, or internet banking access. Organisations or the government would send the beneficiaries e-RUPI by SMS or QR code for a certain activity or purpose. e-Rupi is freely convertible against cash and commercial bank money, and reduces the cost of money issuance, the process through which a nation, or an economic or monetary region, increases its money supply.
This digital platform functions as a digital coupon that can be redeemed at any location that accepts it by scanning a QR code or sending an SMS from a mobile device. There is no need for a card, online banking, or mobile app for this. People can use it as a one-time contactless, cashless, voucher-based payment method to use their e-Rupi vouchers.
The RBI explains in its concept note that the digital Rupee gives customers the same experience as exchanging money in digital form while avoiding the hazards associated with private cryptocurrencies. By avoiding the negative social and economic effects of private virtual currencies, CBDC will provide consumer protection.