e-RUPI: The Way Forward!

Nandu S


e-RUPI is a digital payment solution that was launched in August 2021 by the Government of India and the digital rupee was tossed on December 1, 2022. As proposed ever since its inception, there were many discussions revolved around this fancy term. As there exist a large asymmetry on the realities of India’s digital currency, here we try to comprehend what it is and how to move forward. This policy update tries to bring on the discussion on the lights of major characteristics and attributes behind the payment mechanism, its benefits, and challenges ahead.

e-RUPI: What it is?

e-RUPI is a digital payment solution that was launched in August 2021 by the Government of India. The fact revolves around the answer that even if we do not have a bank account or a credit card, we may still make secure online purchases with the e-RUPI platform. The National Payments Corporation of India (NPCI) has created this platform in conjunction with the Ministry of Health and Family Welfare and the Department of Financial Services.

As a result, on December 1st, 2022, India introduced the Central Bank Digital Currency (CBDC), often known as the digital rupee or e-RUPI. It will function as a digital currency used largely in retail purchases. A total of four cities—Mumbai, New Delhi, Bengaluru, and Bhubaneswar—will participate in the trial program from the outset.

Key Characteristics of e-RUPI

e-RUPI is a digital payment solution that is designed to be simple, secure, and convenient. The platform is based on a prepaid voucher system that can be redeemed by the beneficiary at any merchant that accepts e-RUPI payments. The vouchers are generated in the form of QR codes or SMS, which can be sent directly to the beneficiary’s mobile phone. The vouchers can be redeemed without the need for a bank account or a credit card, making thee-RUPI accessible to a large segment of the population that is currently excluded from digital payments.

The e-RUPI platform is also designed to be flexible, allowing for a range of use cases. For example, the platform can be used for government welfare schemes, such as the Pradhan Mantri Jan Arogya Yojana (PMJAY), which allows for health insurance for the underprivileged sections of society. The e-RUPI platform can also be used for corporate social responsibility initiatives, such as providing food vouchers to employees or donating to charitable organizations.

How does the mechanism work?

e-RUPI will be supplied through banks and will come in the same denominations as paper currency and coins. The digital wallet, provided by the collaborating institutions and accessible on mobile devices, will facilitate all payments. It enables both person to person as well as person to merchant-based exchanges. Moreover, users will have the same access to digital tokens as they do to actual currency at ATMs. This means that they may store their digital tokens in their wallet, use them to make purchases online or in-person, and even send them to other users through a mobile application.

Expected Prospects of e-RUPI

The e-RUPI platform offers a range of benefits for both consumers and merchants. For consumers, the platform offers a convenient and secure way to make digital payments without the need for a bank account or a credit card. This is particularly important for those who do not have access to traditional banking services, such as the underprivileged sections of society.

The platform also offers a high level of security, as the vouchers are generated in real-time and can only be redeemed by the intended beneficiary. For merchants, the e-RUPI platform offers a cost-effective and efficient way to accept digital payments. Unlike traditional payment methods, such as credit cards or mobile wallets, there are no transaction fees associated with e-RUPI payments. This makes the platform particularly attractive to small and medium-sized businesses that may be unable to absorb the high transaction fees associated with traditional payment methods.

Impact of the e-RUPI on the Indian Economy

The e-RUPI platform could make a substantial effect on India’s economy. By providing a simple and secure way to make digital payments, the platform can help to drive financial inclusion and promote economic growth. The platform is particularly important for the underprivileged sections of society, who may be excluded from traditional banking services due to factors such as poverty or lack of documentation.

There is limited research available on the e-RUPI platform as it is a relatively new digital payment solution. However, some studies suggest that digital payment solutions like e-RUPI can have a significant impact on financial inclusion and economic growth. A study conducted by the World Bank in 2018 found that digital payments can help to increase financial inclusion, particularly among women, rural populations, and low-income households. The study also found that digital payments can lead to higher productivity, lower transaction costs, and increased economic growth. In addition to promoting financial inclusion, the e-RUPI platform can also help to reduce corruption and leakages in government welfare schemes.

By providing vouchers that can only be redeemed by the intended beneficiary, the platform can help to ensure that government subsidies and benefits reach the intended recipients. Another study by the Better Than Cash Alliance, a partnership of governments, private sector companies, and international organizations, found that digital payments can help to reduce corruption and promote transparency in government welfare schemes.

The study cited examples from several countries, including India, where digital payments have been used to improve the competence and effectiveness of government welfare programs. The e-RUPI platform can also have a positive impact on the digital economy by promoting the use of digital payments. As more consumers and merchants adopt digital payment methods, the overall productivity of the economy is likely to improve, leading to increased productivity and growth.

Challenges Ahead

Overall, while there is limited research available specifically on the e-RUPI platform, existing studies suggest that digital payment solutions can have a significant impact on financial inclusion, economic growth, and fiscal efficacy. But India’s e-RUPI is also relatively unfashionable as it is not known to most ordinary folks across the nation. In addition, it is also pragmatic to keep an eye on the fact that India is a nation ranked relatively lower in the internet(digital) literacy. So, it is greatly significant to provide financial awareness linking the scope and necessity of e- Rupee as a digital economy tool.

At the same time there is a large notion of privacy and security concern is also aligned with it. That is e-RUPI might potentially amass large amounts of private information on its users and their financial transactions. If this information falls into incorrect hands, it can be used to intrude on individual’s financial dealings. Most of the problems related to privacy and security in modern financial systems might be greatly intensified if an e-RUPI were introduced without sufficient security safeguards.


The e-RUPI platform is a unique and innovative digital payment solution that has the potential to drive financial inclusion and promote economic growth in India. By providing a simple, secure, and convenient way to make digital payments, the platform can help to overcome the barriers of financial deepening. The e-RUPI platform has also received support from several government officials and industry experts.

In a statement released at the launch of the platform, the Minister of Health and Family Welfare, Mansukh Mandaviya, said that e-RUPI would help to improve the efficiency and transparency of government welfare schemes. Looking at the prospects and obstacles ahead, we could come into a sense of idea that if the economy bridges the concerns of privacy and security features, digital divide and financial literacy to a large extent, then the e-RUPI platform has the potential to contribute to these broader goals and help to drive India’s digital economy forward.


Do Digital Payment Transactions Reduce Corruption? Evidence From Developing Countries. (2021, January 30). Do digital payment transactions reduce corruption? Evidence from developing countries – ScienceDirect. Retrieved April 22, 2023, from https://www.sciencedirect.com/science/article/abs/pii/S0736585321000162

https://www.tandfonline.com/doi/full/10.1080/13563467.2017.1259298. (n.d.). Retrieved April 22, 2023, from https://www.tandfonline.com/doi/full/10.1080/13563467.2017.1259298

India&Rsquo;S E-rupee Is Here: What to Expect From the Retail CBDC Pilot. (n.d.). The Economic Times. Retrieved April 22, 2023, from https://economictimes.indiatimes.com/small-biz/money/indias-e-rupee-is-here-what-to-expect-from-the-retail-cbdc-pilot/articleshow/98404352.cms

e-RUPI Contactless Digital Payment Platform | NPCI. (n.d.). e-RUPI Contactless Digital Payment Platform | NPCI. Retrieved April 22, 2023, from https://www.npci.org.in/what-we-do/e-rupi/product-overview

Loukoianova, M. E., Yang, Y., Guo, M. S., Hunter, M. L., Jahan, M. S., Jamaludin, M. F., … & Wu, M. Y. (2018). Financial Inclusion in Asia-Pacific. International Monetary Fund.

Nandu S is a Research Intern at IMPRI.

Read more on IMPRI: India-China Disputes and India’s Growing Global Influence.



    IMPRI, a startup research think tank, is a platform for pro-active, independent, non-partisan and policy-based research. It contributes to debates and deliberations for action-based solutions to a host of strategic issues. IMPRI is committed to democracy, mobilization and community building.

  • Samriddhi
  • Nandu S