The RBI has announced the launch of its first pilot for retail digital Rupee on 01st December 2022. The digital rupee is a new form of digital money launched by the Reserve Bank of India. Also called as e-Rupee or e₹, the Central Bank Digital Currency (CBDC) is a significant development in the country’s financial sector, as it can revolutionize how people transact, store, and access their money.
In this article, we’ll explore how the Indian digital currency differs from the Unified Payments Interface (UPI), a platform that currently dominates digital payments in India. We’ll discuss the benefits of the e-Rupee and how it could shape the future of digital payments in India.
What is Digital Rupee?
Simply said, the digital or e-Rupee is just a digital version of the paper money that we have been using to make purchases. It’s just a digital form with the same value as cash i.e., 1 digital rupee is equal to 1 rupee in cash. In contrast to cryptocurrencies, where the value is constantly changing, this is fundamentally different. You won’t notice any variations with the e-Rupee, though.
How Digital Rupee India is Different from UPI?
Retail Digital Rupee or e-Rupee is different from UPI.
The digital rupee India is an innovative form of digital currency designed to facilitate transactions securely and cost-effectively. It is the first state-backed digital currency to be launched in India. It works differently from UPI, or Unified Payments Interface, which is a system developed by India’s National Payments Corporation of India (NPCI) to enable money transfers through mobile phones and bank accounts. With the e-Rupee, users can send, receive and store digital currency without having to use an intermediary such as a bank or mobile wallet provider.
The digital rupee India is designed to enable low-cost and secure transactions between individuals, businesses and government agencies. The system is based on blockchain technology, which helps to keep records secure and immutable. Transactions are verified by the Reserve Bank of India, which also acts as the custodian of the digital currency.
It has been designed to create a more efficient payment system in India and encourage financial inclusion. It is expected to offer a range of benefits including faster transactions, improved security and lower transaction costs. In addition, it could help to reduce the need for cash transactions, which are associated with high levels of fraud and corruption.
How to Use Digital Rupee?
To use Digital Rupee India, you must be an Indian resident aged 18 and above and have a valid email address. You also need to link your bank account or credit/debit card to the official app. This official app might be available on both iOS and Android platforms. However, RBI has not shared the exact information and process to buy digital Indian currency.
Once you have set up your account, you can use the Digital Rupee wallet to store your funds, make payments, and receive payments from other users. Your account will also allow you to transfer funds between your bank accounts and the wallet.
Unlike UPI, the e-Rupee allows for much simpler and more secure transactions. All you need to do is authorize the payment using your registered mobile number or email address and you’re good to go.
So, if you are looking for a more secure and efficient way to make online transactions in India, Digital Rupee India may be the solution for you.
Suggested Links:
Eligible Banks and Cities
RBI, in its press release, stated that eight banks have been chosen to take part in this pilot project in phases. Four banks—State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank—will launch the first phase in four locations throughout the nation. Following the initial four banks, this pilot will also include the Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank.
Mumbai, New Delhi, Bengaluru, and Bhubaneswar would be the first four cities the pilot would cover. Later, Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla would also be included. As needed, the pilot’s scope may be gradually expanded to cover additional banks, users, and locations.
Conclusion
The RBI hopes to solve issues with current physical currencies and international trade by adopting the digital rupee. Money transfers across countries and currency exchanges are time-consuming and expensive. The fast cross-border money transfer is expected to improve bank cash management and operations with the introduction of the e-Rupee. So, this would result in a great move by the Government of India.