Approach :
- Introduction on digital payments in India.
- Briefly mention the perceived importance of e-RUPI.
- Mention the issues that can potentially obstruct e-RUPI’s success with possible measures to be taken.
India has witnessed a dramatic growth in its digital payments ecosystem. The industry is plush with innovative technologies, new business models, and financial instruments that are rapidly inclining consumer preference towards digital payments.
The RBI’s annual report 2020-2021 noted that Covid-19 pandemic had propelled the country towards less-cash alternatives. After the staggering success of UPI, a first of its kind interoperable mobile banking by NPCI, the next in-line innovation – e-RUPI– is widely regarded as India’s first step towards a digital currency. The e-RUPI makes a small, yet firm step towards addressing the current barriers to digital financial inclusion.
Perceived significance : The combination of factors & features makes the e-RUPI an interesting development. Designed as a digital prepaid voucher, with targeted purpose & person for a given transaction, it promises to plug pilferage in welfare schemes, minimize delays and provide easy access to beneficiaries. Apart from working through QR codes, it offers transactions through SMS-based strings, eliminating the need of smartphones or internet connectivity and bank account.
However, the practical aspects of its implementation will determine the success of e-RUPI. Some of the issues are :-
- Like other digital payment instrument, e-RUPI relies on a certain set of stakeholders to provide services. While the e-RUPI is not restricted to governments, it will need to depend on the private sector for game-changing scale of adoption.
- Given the complex enabling environment, access to mobile networks & affordable services will continue to remain a necessity. While discussing access, it is to be noted that the metrics available are focused on total subscribers and not the accurate measure of unique subscribers – a figure that will be important for the growth & uptake of e-RUPI. Additionally, quality & reliability of mobile networks is also important. This will require partnering with the telecom companies.
- Given that a beneficiary’s mobile number is the point of action, it will rely on existing identification & verification. It is yet to be confirmed if beneficiaries will be identified through mobile numbers linked to Aadhar. But it will be myopic to overlook the challenges of erroneous inclusion, exclusion of most vulnerable, arising from infrastructural & institutional lacunae.
- E-RUPI has exposed the existing gaps more clearly, but unless action is taken on building the enabling environment, it may never achieve its inclusion goals.
- A strong focus on digital literacy is needed to promote safe and inclusive adoption. Although e-RUPI mitigates many risks, yet many could be easily manipulated like scams related to QR codes. The digital literacy drive must focus on building a culture of privacy, and educating beneficiaries on its safe & secure use.
All these will require greater collaboration across all stakeholders. Reaching out to the marginalized & underprivileged through targeted campaigns will aid in achieving the inclusion goals of e-RUPI. Struck by the existing challenges, e-RUPI may be a game changer. Its success relies on a favorable environment and enabling circumstances, which will eventually push India closer to the digital frontier.