Explained | Criminal cases and passport denial, retrospective tax, mid-air mental block of athletes, and India’s digital voucher payment system

Explained | How India’s new welfare-focused digital payment system works?

e-RUPI is a digital voucher that can be redeemed by beneficiaries when they make use of any specific government services   | Photo Credit: PTI

Prime Minister Narendra Modi launched on Monday a new digital payment system to send government’s monetary benefits directly to beneficiaries’ mobile phones. The e-RUPI system, developed by National Payments Corporation of India (NPCI), Department of Financial Services, National Health Authority and Ministry of Health and Family Welfare, is said to be leak-proof and offers non-transferable service to citizens.

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What is e-RUPI system?

e-RUPI is a digital voucher that can be redeemed by beneficiaries when they make use of any specific government services. The digital system does not require a card, app or internet access to redeem the vouchers. The digital tokens will be sent to respective citizens by the government via SMS strings or QR codes to be used for a specific purpose.

The digital token-style system is seen as a way to spot potential gaps in the existing welfare payments infrastructure and fix them.

How does it work and where can it be used?

The cashless and contactless medium is similar to how a corporate-provided Sodexo coupon card works. The big difference is there won’t be any card here. The beneficiary, citizen in this case, will be given digital vouchers to access targeted welfare services like medicines and nutritional support, and medical diagnostics under the government’s health schemes.

A QR code or SMS-string will be sent to the beneficiary, and they will need 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 specific purpose, they can’t be transferred or cashed out.

e-RUPI is powered by NPCI’s UPI platform and the service has onboarded about a dozen banks to be issuing entities. These include both private and public banking institutions. The beneficiaries will be identified by their mobile number, and the vouchers will be linked to it. The digital voucher can be redeemed only that individual.

The government also plans to open the service to private enterprises so they can use it as part of their employee welfare or benefits programmes. If private companies opt to use e-RUPI for their employees, they will have to approach one of the partner banks with details of specific individuals and the service they would like to avail.

Is e-RUPI a digital currency?

No, the e-RUPI is built for a specific transaction for a service availed at a particular welfare centre. The digital vouchers are backed by the Indian rupee and are not transferable. This puts e-RUPI within the frame work of a voucher-based payment system than a virtual currency, which has a different character.

Also Read | Explained | Is RBI planning a digital currency for India?

What are some challenges in implementing e-RUPI?

According to data intelligence firm Data Reportal, the number of mobile connections in India as on January 2020 is equivalent to 78% of the total population. And during the period between January 2019 and January 2020, mobile connections dropped by 1.4%. Enabling the roughly 22% of population to get a mobile phone to access welfare services via e-RUPI will be a problem to be solved.

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Printable version | Sep 28, 2021 6:20:40 PM | https://www.thehindu.com/sci-tech/technology/e-rupi-how-indias-new-welfare-focused-digital-payment-system-works/article35682640.ece

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