Whenever we donate money to someone, one thought always crosses our mind – Will they use it for the specific purpose they asked for? This same thought worries our Government, too.
To solve this issue with the help of technology, NPCI launched e-RUPI. A digital voucher that can redefine how welfare programs and schemes make a difference in India.
Let’s discuss how e-RUPI works and check whether it is a game-changer or not.
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Buckle up. Here we go!
What is e-RUPI?
Launched in August 2021, e-RUPI is a digital voucher. It is a way to provide targeted, contactless, and secure financial support for various welfare programs and schemes.
The Government or any organisation can share an e-RUPI voucher with you for a specific purpose or activity via SMS or QR code. You can redeem the voucher without a card, digital payments app or internet banking access at the merchants accepting e-RUPI.
The e-RUPI rides on the Unified Payments Interface (UPI) system of the National Payments Corporation of India (NPCI). Yeah, the same folks behind RuPay, AEPS, and other transformative payment systems in India.
Also, let’s clarify this. The E-Rupee (Digital Rupee) and e-RUPI are different. By mistake, these two terms are often used interchangeably.
How does e-RUPI work?
Imagine you want to help someone pay for their medical expenses or fund their education.
Instead of giving them cash or transferring money to their bank account, you can send them an e-RUPI voucher directly to their mobile phone.
This voucher is like a prepaid gift card. They can only use it for specific purposes, such as medical treatment, education, or any other predefined service.
Here’s a step-by-step breakdown of how e-RUPI works:
1. Sponsor:
The government, a corporate entity, or a non-profit organisation communicates information (specify fields such as name, mobile number, amount, the purpose of the voucher, expiry date, and so on) with an issuer bank to issue e-RUPI.
2. Issuer:
The issuer bank, with the help of NPCI, generates the e-RUPI voucher and shares the voucher with the recipient. This voucher is generated in a digital format and sent to the recipient’s mobile number.
3. Recipient:
The recipient receives the e-RUPI voucher on their phone as an SMS or QR code. They can then visit the service provider that is part of the e-RUPI network, and the voucher is redeemed by scanning the QR code.
4. Service provider:
When the recipient visits the service provider, they simply need to show the e-RUPI voucher received on their phone. The service provider scans the QR code or SMS string. And the payment is complete.
For more specific information about e-RUPI, check out this document.
Benefits of e-RUPI
1. Targeted support:
e-RUPI allows for precise targeting of beneficiaries for specific services, preventing misuse of funds and ensuring that the intended recipients receive the support.
2. No bank account or smartphone required:
Unlike traditional digital payments, the recipient doesn’t need to have a bank account or a smartphone to receive an e-RUPI voucher. This widens the reach of financial inclusion.
3. Efficient and transparent:
The entire process is digital, reducing administrative overhead and ensuring transparency in the utilization of funds.
4. Reduced leakages:
Since the voucher is limited to a particular purpose, the chances of diversion of funds are minimized, making the system more efficient.
5. Anonymity and security:
One of the unique features of e-RUPI is that it ensures privacy and security. The voucher doesn’t reveal the beneficiary’s personal details to the service provider, thus maintaining confidentiality.
Disadvantages of e-RUPI
1. Limited use:
e-RUPI vouchers can only be redeemed at specific service providers or merchants within the e-RUPI network. This restriction limits its usability in some cases.
2. Service provider adoption:
The success of e-RUPI depends on the willingness of service providers to accept these vouchers. If the network is limited, it could hinder its widespread use.
The road ahead for e-RUPI
e-RUPI is a step towards transforming the way welfare benefits are distributed in India. Combining the power of digital technology with a targeted approach, it aims to make financial support more accessible, efficient, and secure.
However, like any new system, it comes with its own set of challenges. As e-RUPI evolves and gains wider acceptance, it has the potential to positively impact the lives of countless individuals, ensuring that the benefits intended for them reach them directly and effectively.
Also, recently, the RBI has announced that non-bank prepaid payment instruments (PPI) companies can now issue vouchers on behalf of individuals. This means soon you can issue e-RUPI vouchers to someone like your maid, kids, etc.
So, whether you’re a recipient, a service provider, or just curious about the changing landscape of digital payments, e-RUPI is a development worth keeping an eye on.
That’s it for today, buddies. Stay tuned for more insightful newsletters on personal finance topics that matter to you.
Remember to share these insights with your buddies. Until next time!
Still Curious?
If you are like me, who likes to analyse a little more or check out content in different formats, well you are in luck. Below you can find some suitable content we found.
NPCI – Empowering Digital Payments by entering the era of e-RUPI
IMPRI – e-RUPI: The Way Forward!
Note: We don’t have any affiliation with them. We are sharing links only for educational purposes. The opinions expressed by them belong solely to them and do not reflect the views of Vrid.