01 APRIL, 2024

DHIRAJ YADAV

We are seeing that RBI has launched Indian CBDC known as E-Rupee. Not to be confused with e-RUPI(which is Prepaid Vouchers from government of India).

Lets first talk a little bit about UPI-

UPI developed by NPCI is a proven tech in digital payments space.

But there are several risks associated with UPI, because UPI ID is directly linked to the Bank account. Which means if your UPI ID is compromised the scammer can empty all of your bank balance.

NPCI has already taken several steps to tackle with this problem, like with new updates of UPI you can only send up-to 2k INR withing first 4 hours in case of a new recipient.

But this limits digital payments, what if someone is travelling and need to fill his car's fuel tank. Suppose he have purchased Petroleum of INR 5000, and it is first time he visited that fuel station. This means he can't use UPI to make digital payments in this case.

Government surely does not want this, they want to promote digital payments.

You may ask why does government wants to promote digital payments?

A lot of Central government's funds wasted in printing, transporting and storage management of paper currency. Paper currency also leads to black-money and corruption, as it can be impossible to track paper-currency transactions.

The cost associated with infrastructure required for digital payments (i.e. basically server management) is very less in comparison to the cost and drawbacks associated with paper-money.

Also some people say that government might start charging on UPI payments in future, but I think that it's never going to happen. Digital payments save a lot of trouble for a government. Digital transaction can be easily tracked by government if needed.

So coming back to the point, what if someone needs to make a digital transaction of more than 2k INR to a new recipient(and he can't wait for 4 hours). Then it is a use case for E-Rupee.

E-Rupee is basically a digital wallet which you can top-up using even UPI and make your payment.

Since this wallet is not directly linked to your bank account, so it relatively safe.

NPCI says that UPI is made of person to person transactions. So if you need to pay to a merchant(for both small and large payments) you can use E-Rupee.

Thank You