E-RUPI – Inventing a Leakage-free Voucher System For India

The Government of India along with the RBI and NPCI (National Payments Corporation of India) are on a mission to turn India into a digital, cash-lite economy. The introduction of E-RUPI is yet another initiative taken towards achieving their ultimate goal. 

But, why was there a need to introduce E-RUPI in India?

Every year, the central government sends direct benefit transfers (DBT) to its citizens under 351 schemes. In the first half of 2021, the total volume of DBT increased by almost 37% to about INR 3.9 lakh crore when compared to the same period last year. 

DBTs ideally include the transfer of pensions, fertiliser subsidies, the now-discontinued LPG subsidy, Covid-related cash and so on. However, many bogus accounts and aliases were causing a leakage in these transfers, steering the rightful owners deprived of their benefits.  

Hence, the central government introduced E-RUPI to eliminate pilferage and ensure smooth benefit transfers. 

In its essence, E-RUPI is a cashless and contactless payment system designed in the form of e-vouchers. 

These e-vouchers will help, 

  • Ensure direct benefit transfers (DBT) to beneficiaries
  • Be a more effective rewarding medium than cash
  • Give new dimensions to digital governance
  • Eliminate the chances of fraudulent activities 

In fact, according to a statement released by the Prime Minister of India, E-RUPI will soon define how India will progress in the coming years and connect people’s lives with technology. 

Through this blog, we aim to shed light on the basic concept of E-RUPI. We’ll also deep dive into its objectives, features, benefits and how E-RUPI will serve as a game changer. 

What Is E-RUPI?

E-RUPI is basically an innovative digital payment solution to buy, send, and redeem vouchers at any merchant location accepting E-RUPI. It is ideally sent to a beneficiary in the form of an SMS or a QR code .

This seamless and contactless prepaid payment mechanism is easy, safe, and equally secure. It’s primary objective is to,

  • Eliminate leakages in the delivery of government welfare schemes
  • Ensure no involvement of middlemen that cut costs 
  • Digitally connect service sponsors and the issuers with the beneficiaries 

It also aims to ensure that,  

  • The benefits reach the respective beneficiaries
  • A beneficiary’s details are kept confidential at all times
  • The entire transaction process is fast and time reliable

In addition to this, beneficiaries don’t need a card, digital payment application, or internet banking to redeem these E-RUPI vouchers

How Does E-RUPI Work?

There are two perspectives around this. 

  1. How are E-RUPI vouchers created?
  2. How can consumers redeem E-RUPI vouchers? 

Let’s understand the two in detail. 

How Are Vouchers Created Under E-RUPI? 

The process to get E-RUPI vouchers is quite simple.

  • The Government of India has boarded quite a few public and private sector banks. These banks will act as primary E-RUPI voucher issuers. 
  • To get E-RUPI vouchers, corporates or government agencies will have to reach out to these authorised banks.
  • Moreover, they will have to share a list of beneficiaries along with, 
    • Beneficiary names
    • Mobile numbers 
    • Purpose of the voucher 
  • Authorised bank will then create personalised vouchers with the help of NPCI
  • The vouchers will then be shared directly with the beneficiaries via the corporate 
  • The beneficiaries will get the vouchers through SMS or in the form of a QR code
  • The beneficiaries can redeem these vouchers at specified centres only. They may also be asked to authenticate the voucher via an OTP (one-time password)

How Can Consumers Redeem E-RUPI Vouchers?

Redeeming an E-RUPI is quite simple and easy. Here’s an example to explain how to redeem an E-RUPI. 

  1. A consumer makes a purchase at a departmental store. 
  2. As a token of gift, the store decides to give the consumer a one-time prepaid voucher. 
  3. The departmental store immediately sends the E-RUPI voucher details to the consumer’s registered mobile number via an SMS or in the form of a QR code. 
  4. With E-RUPI, the consumer can now redeem this voucher back at the departmental store the next time they make a purchase.
  5. The consumer can also redeem it at any other merchant location that accepts E-RUPI, and as directed by the departmental store. 

And, since the voucher is sent to a beneficiary’s phone, the chances of loss of voucher are minimal.

E-RUPI is only a 2-step redemption process that makes it easy for both the beneficiary and the merchant to pay and receive the funds, respectively in less than a minute’s time.  

What Benefits Does E-RUPI Offer To Various Stakeholders?

The benefits of E-RUPI extend beyond just benefiting the receivers of the digital vouchers. The issuers too aid from it. Let’s take a look  

Benefits For CorporatesBenefits For MerchantsBenefits For Consumers
Enable well-being of employees Authorised via a verification code, chances of treachery are lowAvailable as e-vouchers. No need to carry a printed copy
Take advantage of end-to-end digital transaction Contactless and hasslefree payment collection2-step redemption process
Doesn’t require any physical issuanceLow changes of decline as they’re preloaded with fundsNo need to share personal details to redeem the voucher
Reduced cost at all levelsEasy to Identify bogus beneficiaries as it is person and purpose specificNo need for a digital payment app or a bank account to redeem the voucher
Quick, safe, and hasslefree disbursal of vouchersDirect benefit transfers with no pilferage and involvement of middlemen

Who Has Developed The E-RUPI?

E-RUPI is a Reserve Bank Of India (RBI) approved e-voucher authorised by the Government Of India. It was developed and launched by the National Payments Corporation of India (NPCI) along with the Department of Financial Services (DFS) on Aug 2, 2022. The scheme was, however, inaugurated by the Prime Minister of India.

National Health Authority (NHA), Ministry of Health and Family Welfare (MoHFW) and many partner banks have also played a critical role in its launch and execution on ground level.

Currently, E-RUPI vouchers are non-transferable in nature. However, the NPCI has indicated that it will evaluate the transferability feasibility of  E-RUPI from a technical, operational and regulatory standpoint at a later stage.

What Is The Difference Between E-RUPI And UPI?

Here’s a table of differences between E-RUPI and Unified Payments Interface (UPI).

E-RUPIUnified Payments Interface (UPI)
Prepaid, voucher-based payment systemSelf-account transaction system
Non-transferable in nature Transfer and receive money 
Can only be redeemed at specific merchant locationsCan be used for making payments at comparatively wider merchant locations  
Person-specific and purpose-specific in natureNeither person nor purpose specific in nature
No bank account required Bank account is required 
Issued by a bankSupported by a bank
No internet connection required to redeem the voucherInternet connected required to complete transactions
No app required to redeem the voucher App required to make transactions
No registration required of any sortNeed to register with UPI to make and receive payments

How is E-RUPI Different From A Digital Currency (CBDC)?

Many people are confusing digital currency with E-RUPI. However, the two are quite different from one another.

Here’s how.

E-RUPI is not a digital payment platform like GooglePay or Paytm. It’s a simple service which can be used by service providers to transfer redeemable vouchers to beneficiaries directly. 

In its essence, 

  • It’s a government-sponsored voucher based system
  • It’s mechanism largely depends on the Indian currency to transfer benefits to consumers
  • The specifications of its purpose also makes it very different from digital currency 
  • It’s quite similar to a voucher-based payment system
  • The success of success and future of E-RUPI will largely depend on end-use cases 

Meanwhile, the purpose of digital currency is very different. 

  • It’s more towards helping individuals make payment via their digital payment apps at any given point. 
  • It’s completely owned by the RBI and with the least interference from the government. 
  • Users also need to have an account with a bank or the RBI to use digital currency to make payments.
  • It’s a way to eliminate people like us away from private currencies like bitcoin and to reduce the flow of cash in the system

Is E-RUPI A Game Changer?

As the practical implementation of E-RUPI is increasing, the operational intent is also at a growth. Where only government agencies were using this voucher-based system to deliver benefits to beneficiaries such as under the Ayushman Bharat Scheme, corporates, and other stakeholders are realising its benefits.  

Private entities can use E-RUPI to reward employees or even use these e-vouchers as a part of their corporate social responsibility (CFS) initiatives. The scope of use of E-RUPI is also high in education, health support, and other similar industries. 

Moreover, E-RUPI will prove to be more effective in the rural segment owing to its nature and applicable rules. E-RUPI could also help make credit easily available to the MSME segment.

This initiative taken by the government and the technology it leverages will have a positive transformation especially on the lesser privileged segment of India. 

This is just another step taken towards building a digital India, and there’s much more to come!

Frequently Asked Questions (FAQs) About E-RUPI

As mentioned above, E-RUPI will play a critical role in making direct benefit transactions (DBT) more effective and efficient considering the current benefit disbursal system. 

Who Can Issue E-RUPI?

E-RUPI can only be issued by banks authorised by the RBI to Prepaid Payment Instruments service providers and Payment Service Providers (PSPs) in the UPI ecosystem. Only the authorised banks can initiate requests to create E-RUPI vouchers.

All disputes accruing to E-RUPI vouchers will be handled by the issuing banks.

How Can One Share E-RUPI Vouchers? 

E-RUPI vouchers can only be shared in digital format, i.e. as a QR code or via SMS-string. Printing of vouchers is neither permitted nor acceptable.

Most importantly, E-RUPI vouchers are person-specific and purpose-specific. Hence, they are non transferable. 

Who Can Request For E-RUPI?

Entities that can request for E-RUPI vouchers include, 
– Businesses 
– Corporates
– State and union government departments   

These issuers will have the authority to reconcile the voucher redemptions.

Only full-KYC sponsors can request for E-RUPI vouchers from their registered accounts.

E-RUPI vouchers can only be used for purchasing commodities from designated merchants only or at voucher accepting merchant locations

What is the Limit and Validity of E-RUPI vouchers?

The maximum limit on E-RUPI is INR 1 lakh per voucher. The previously defined maximum limit was INR 10,000. 

Beneficiaries are now allowed to use one voucher multiple times until fully redeemed as opposed to the voucher being one-time redeemable in nature previously. 

Each E-RUPI voucher will come with a defined validity period. At present, the maximum validity period per voucher is one year from the date of issuance.  

Authorities believe that increased limits and multiple payment benefits will help beneficiaries move towards digital payment systems and go cash-lite, if not completely cashless.

How Does E-RUPI Help The Unbanked Population?

E-RUPI can help the unbanked population by making the direct benefit transfers (DBT) leakages free. This means that no middleman can cut corners while disbursing funds related to pension, subsidies, health-benefits, or other reasons. 

Moreover, E-RUPI is accessible to the unbanked population as the beneficiary is not required to have a bank account or a digital payment mobile application to redeem the voucher. E-RUPI vouchers can also be used by consumers who do not have a smartphone or live in an area with limited or no internet connectivity.

Is There Any Standard Process In Place For E-RUPI Distribution?

As of date, no standards have been defined for the distribution of E-RUPI vouchers. Only that banks can use channels such as SMS, WhatsApp, emails, etc. to send vouchers to the beneficiaries. 

How Many Public And Private Banks Support E-RUPI?

At present, a total of 21 public and private sector banks support E-RUPI. NPCI has also partnered with 1900+ hospitals where beneficiaries can redeem E-RUPI, in the context of welfare schemes started by the Ministry of Health for COVID-19 vaccination.

As of date, no standards have been defined for the distribution of E-RUPI vouchers. Only that banks can use channels such as SMS, WhatsApp, emails, etc. to send vouchers to beneficiaries.