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  • Writer's pictureAbhinav Paliwal

How e-RUPI Works?

Updated: Jan 2

In the realm of digital payment solutions, two innovative concepts have gained prominence in recent years: It is a voucher-based system designed to make the delivery of government welfare schemes and other benefits more efficient and transparent. We will explore everything step by step in this blog post.

Table of contents:


What is e-RUPI?

e-RUPI is a digital voucher-based payment system developed by the National Payments Corporation of India (NPCI). It focuses primarily on targeted welfare payments, providing a secure and direct transfer of funds to beneficiaries without requiring a bank account.

Users can use this easy one-time payment method to make purchases at businesses that accept UPI e-Rupi Vouchers without using a card, a digital wallet, or internet banking. Organizations would send the recipients the e-RUPI by SMS or QR code for a particular activity.

This contactless e-RUPI is simple, secure, and safe because it fully protects the beneficiaries' personal information. Because the amount needed already exists in the voucher, the complete transaction process using this voucher is much faster and more trustworthy.

e-RUPI enables the government to connect various stakeholders, such as government departments, service providers, and beneficiaries, through a digital platform. It enhances transparency, minimizes leakage, and promotes financial inclusion by delivering benefits directly to marginalized communities.


What Is The Difference Between e-RUPI and CBDC?

What Is The Difference Between e-RUPI and CBDC
Difference Between e-RUPI and CBDC

These are the differences between e-RUPI and CBDC:

  • Scope:

e-RUPI is primarily focused on targeted welfare payments, whereas CBDC aims to transform the entire monetary system by digitizing a nation's currency.

  • Purpose:

e-RUPI streamlines the delivery of government welfare schemes, ensuring the targeted and transparent distribution of benefits. CBDC, on the other hand, provides a digital alternative to physical cash and aims to enhance the efficiency, security, and inclusivity of financial transactions across the economy.

  • Centralized vs. Decentralized:

e-RUPI application operates on a centralized platform facilitated by the NPCI, while CBDC can be implemented in both centralized and decentralized models, depending on the design choices made by the central bank.

  • Accessibility:

e-RUPI digital currency focuses on providing financial inclusion to individuals without bank accounts, ensuring that welfare benefits reach marginalized communities. CBDC, on the other hand, aims to provide a digital payment solution to the entire population, including those with bank accounts, offering convenience and efficiency to all.

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How To Use e-RUPI?

During the Union Budget 2022-2023, Finance Minister Nirmala Sitharaman announced the RBI’s intention to launch the country’s official Central Bank Digital Currency (CBDC). Now, HDFC Bank has started issuing virtual currency to select participants, to conduct transactions through a digital wallet. Let us understand how to use the Digital Rupee (e₹) and its benefits.

e₹ is the digital form of the existing legal tender (paper notes and coins) in India. The RBI has launched e₹ in the same denominations as the cash tender that is currently in circulation. Thus, e₹ would exist as a digital token, standing in for the money we use. The RBI intends to distribute this mode of transaction through Token Service Providers (TSPs), who will then distribute e₹ to end users.

The banks participating in the e₹ pilot program, including HDFC, will then acquire the tokens from RBI via the T-SP merchants. The issuance of e₹ will be processed online, helping the RBI avoid operational costs like printing, storing, or transporting physical cash.

e-Rupi needs to be stored in a digital wallet which is like an app you can download and keep on your cell phone and other devices. You can then conduct financial transactions using the e-Rupi stored in this wallet. Currently, the e₹ app is available for Android users only.


Where To Use e-RUPI?

As a participating retailer or customer, you can conduct person-to-merchant (P2M) and person-to-person (P2P) transactions using e₹. You can also pay retailers using QR codes displayed at their places of business. For instance, you can pay for your purchases at retail stores and shopping malls and transfer funds between accounts. Essentially, you can use e₹ in the same way as you would use cash.

The RBI has launched the pilot program of e₹ in four Indian cities currently. So, if you reside in Mumbai, New Delhi, Bengaluru, or Bhubaneshwar, and have a bank account in one of the participating banks (HDFC Bank included) and have been invited by your bank (during this pilot phase), you can download the bank’s digital wallet to conduct transactions.

After the pilot phase, the RBI intends to extend e₹ services to more cities like Ahmedabad, Hyderabad, Kochi, Lucknow, Guwahati, Gangtok, Shimla, and Patna.

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What Benefits Of e-RUPI?

Having explained how and where to use e₹, let us assess its many benefits. They include the following:

Benefits of e-RUPI
Benefit of e-Rupi

Low Costs of Transaction

You can settle your payments made in e₹ without worrying about high transaction costs. Banks do not need to invest in separate settlement assurance infrastructure, and thus, as the user, you will not need to pay any fees to the banks or intermediaries providing e₹ services.

Secure Mode of Transaction

There are several risks associated with carrying physical cash, including theft, counterfeit currency, etc. The most significant benefit of e₹ is that it is incredibly secure. The transactions are end-to-end encrypted making it a safer, more secure mode of transaction.

Low Settlement Risks

The RBI shall deem transactions conducted via e₹ as final. This feature lowers the settlement risks within the financial system, thus reducing the need for interbank settlements. This is akin to UPI payment systems wherein the digital currency is transferred like cash, as opposed to bank balances.

Financial Inclusion

People from rural pockets of India have limited to no access to conventional banking services. They still struggle to participate in India’s financial system. The RBI’s e₹ launch intends to address this issue and take measures to include such individuals in the financial system.

Increased Efficiency and Liquidity

The benefits of e₹ also include the potential to speed up financial transactions, making them more efficient. e₹ eliminates the need to exchange cash physically, nor do you have to wait for banks to clear your cheques. Plus, you can conveniently liquify and scale your transactions.

With the launch of the e₹, the RBI is on a mission to strengthen India’s digital economy and make online transactions risk-free. e₹ will also reduce the need for card networks and payment gateways. Once e₹ is launched nationwide, you will be able to conduct transactions conveniently, with total anonymity, and enjoy quick settlements.


How Does e-RUPI Work?

Using e-Rupi is like using cash, except your cash will be in the electronic token form stored in your digital wallet. Here's how e-RUPI works:

  • Issuing e₹

The RBI will issue electronic tokens that can be exchanged one-to-one. e-Rupi will have the same denominations that are currently circulating in the country. The RBI will distribute the required number of tokens to intermediaries called Token Service Providers (TSPs). The banks will acquire the tokens from RBI via the TSP merchants. The issuance of Digital Rupee will be processed online. The RBI does not have to bear operational costs like printing, storing, or transporting physical cash.

  • Acquiring e₹

The participating banks will make the CBDC tokens available to their customers through a digital wallet. You can withdraw digital tokens from the bank in the same way you would withdraw cash. You can convert your cash holdings to your preferred e-Rupi using the Unified Payment Interface (UPI) payment gateway. Some banks may allow instant transfers from the bank account to the digital wallet. The RBI ensures that your tokens are secure by implementing security methods like cryptography and quantum computing-resistance systems. Also, each token will have a unique token number to prevent counterfeiting of tokens. This will also allow the wallet provider to restore the total value of digital tokens in case you lose your device.

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What Are The Usecases For e-RUPI?

Now that you know how e-Rupi operates, let us understand how you can make transactions:

Usecases for e-RUPI
Usecases for e-RUPI

1) Person-to-Person (P2P): You can transfer money to another person's digital wallet by using the recipient's mobile number or QR code. You need to enter the amount or select the equivalent denominations available in your e₹ wallet and hit send. Your funds will be transferred to the recipient in real-time.

2) Person to Merchant (P2M): You can scan the QR code displayed by merchants at their business establishments. Select the denominations or enter the amount. Approve the payment and share the transaction ID with the merchant.

3) Unloading the digital wallet: You can send money from your digital wallet to your linked bank account. In your digital wallet, select 'Unload' or other suitable options. Select the bank account and amount you need to credit.

Once e-Rupi becomes mainstream, you can enjoy benefits like truly cashless payments, speedy fund transfers, and increased digital security. Needless to say, this regulated cryptocurrency will help the Government efficiently manage money in the country and improve financial inclusion.


How To Download The e-Rupi App?

1) Check App Availability: First, check if the e-RUPI app is available for download on your device's app store (Google Play Store for Android or Apple App Store for iOS). Simply search for "e-RUPI" in the app store's search bar.

2) Verify the Developer: Make sure to download the app from the official developer. In the case of e-RUPI, it is likely to be developed by the National Payments Corporation of India (NPCI). Verify the app's developer name before proceeding with the download.

3) Install the App: Once you have found the official e-RUPI app, click on the "Install" or "Get" button to begin the download and installation process.

4) Permissions: During the installation, the app may ask for certain permissions on your device, such as access to the camera, location, etc. Review the permissions and grant the necessary ones to ensure the app functions correctly.

5) Registration and Setup: After the installation is complete, open the e-RUPI app. You will likely need to register or set up an account to use the service. Follow the on-screen instructions to complete the registration process.

6) Verification: Some apps require additional verification steps, such as verifying your mobile number or email address. Complete any required verification steps to activate your account fully.

7) Login and Start Using: Once registered and verified, log in to the e-RUPI app using your credentials. You should now have access to the e-RUPI features, and you can start using them for digital payments and welfare transactions, as intended.

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Best e-Rupi Mobile Application In India

These have established themselves in the Indian market and are widely used for various digital payment transactions. Below some of the vendors are:

HDFC Bank - Embrace the future of digital transactions to send or receive money or pay for transactions through Digital Rupee (e₹).

The HDFC Bank Digital Rupee Wallet App is currently only available for Android users. HDFC Bank Digital Rupee is available in selected cities only. Click here to download the app from the Google Play store.

SBI Bank - The Reserve Bank of India (RBI) has identified eight banks for the phase-wise pilot launch of the retail digital rupee. Four banks including State Bank of India (SBI), ICICI Bank, YES Bank, and IDFC First Bank are taking part in the first phase of the pilot program while Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank will join the pilot in the second phase.

IDFC First Bank - CBDC, or Central Bank Digital Currency, is a legal tender issued by the Reserve Bank of India. Also called the “digital rupee” or e₹, it will offer features of physical cash like trust, safety, and settlement finality with atomicity in digital mode.

e-Rupi represents a direct claim on the central bank. It can be used to carry out transactions or store value digitally, similar to how currency notes can be used in physical form.

ICICI Bank - Begin your e-RUPI journey with listed merchants. Merchants need to be enabled on CBDC and have a Digital Rupee wallet to accept transactions in Digital Rupee. These provisions are being made in stages.

Here’s a list to help you locate merchants in the vicinities of Bangalore, Bhubaneshwar, and Mumbai.



e-RUPI and CBDC represent significant advancements in the digital payment landscape, each with its unique characteristics and objectives. While e-RUPI focuses on targeted welfare payments and promoting financial inclusion in India, CBDC has broader implications for the entire monetary system of a country.

Both solutions have the potential to revolutionize financial transactions, enhance transparency, and improve the efficiency of payments. As technology continues to evolve, it is crucial to explore how these digital payment solutions can coexist and complement each other in the ever-evolving digital economy.

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Feb 01
Rated 5 out of 5 stars.

Very Insightful

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