Prime Minister Narendra Modi on Monday launched e-RUPI, an electronic voucher-based digital payment system which will function like a prepaid card for both the government and private organisations.

e-RUPI is positioned as a leak proof payment system primarily for government’s welfare schemes and is expected to boost digital currency in India.

The platform, which has been developed by the National Payments Corporation of India (NPCI), Department of Financial Services, Ministry of Health and Family Welfare and the National Health Authority, will be a person-specific and purpose-specific payments system.

e-RUPI will function as a cashless and contactless digital payments medium, which will be delivered to mobile phones of beneficiaries in form of an SMS-string or a QR code. This digital currency will be more like a prepaid card that will be redeemable at specific accepting centres without any credit or debit card, a mobile app or internet banking.

e-RUPI will connect the sponsors of the services with the beneficiaries and service providers in a digital manner without any physical interface.

e-RUPI has also on-boarded some banks which will issue these digital currencies. An organisation can approach a bank to issue the e-Rupi for a specific payment, which can then be distributed to their employees or vendors or any other person who needs to be paid. The beneficiaries will be identified using their mobile number and a voucher allocated by a bank to the service provider in the name of a given person; it would only be delivered to that person.

It can also be used for delivering services under schemes meant for providing drugs and nutritional support under Mother and Child welfare schemes, TB eradication programmes, drugs & diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertiliser subsidies etc. The government also said that even the private sector can leverage these digital vouchers as part of their employee welfare and corporate social responsibility programmes.

The Reserve Bank of India is working towards a phased implementation of digital currency or CBDC — digital currencies issued by a central bank that generally take on a digital form of the nation’s existing fiat currency such as the rupee. Although CBDCs are conceptually similar to currency notes, the introduction of CBDC would involve changes to the enabling legal framework since the current provisions are primarily synced for currency in paper form.