The digital token-style approach is viewed as a tool to identify and address any weaknesses in the current welfare payments infrastructure.
On Monday, Prime Minister Narendra Modi announced the start of a new digital payment system that will allow the government to transmit monetary incentives to beneficiaries directly to their mobile phones. The National Payments Corporation of India (NPCI), Department of Financial Services, National Health Authority, and Ministry of Health and Family Welfare developed the e-RUPI system, which is believed to be leak-proof and provides citizens with non-transferable services.
What is e-RUPI System?
Beneficiaries can utilize an e-RUPI to get a digital voucher that can be redeemed for any government service. The digital method does not require a card, an app, or internet access to save the coupons. The government would send the digital tokens to citizens via SMS strings or QR codes to be utilized for a specified purpose.
The digital token-style approach is viewed as a tool to identify and address any weaknesses in the current welfare payments infrastructure.
How does it work, and where can it be used?
A corporate-provided Sodexo coupon card operates similarly to the cashless and contactless medium. The main distinction is that no card will be used. Under the government's health programs, the recipient, in this case, a citizen, will be given digital vouchers to access targeted welfare services such as medicines and nutritional support, as well as medical tests.
The beneficiary will receive a QR code or SMS string, which they must display to the welfare service provider to complete the transaction. There would be no need for printouts. These vouchers cannot be transferred or redeemed since they were developed for a specific purpose.
e-RUPI is based on NPCI's UPI technology, and roughly a dozen banks have signed up to be issuing organizations. Both private and public banking organizations are included. The coupons will be linked to the beneficiaries' mobile numbers, used to identify them. That person can only use the digital voucher.
The government also intends to make the service available to commercial businesses to incorporate it into their employee welfare or benefits programs. Suppose private enterprises want to use e-RUPI for their employees. In that case, they must contact one of the partner banks and provide information on specific individuals and the service they want to use.
Is e-RUPI a digital currency?
No, thee-RUPI is designed for a single transaction involving a service provided by a specific welfare center. The digital vouchers are non-transferable and secured by the Indian rupee. This places e-RUPI in the context of a voucher-based payment system rather than a virtual currency, which has a distinct personality.
What are some challenges in implementing e-RUPI?
According to data intelligence firm Data Report, India's mobile connections accounted for 78 percent of the total population in January 2020. The number of mobile connections fell by 1.4 percent between January 2019 and January 2020. It will be challenging to enable about 22% of the population to obtain a mobile phone and use it to access welfare services via e-RUPI.
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