FinTechE-Rupi: A New Milestone in Indian Economy

Introduction

The Digital India Initiative has stepped up one more ladder towards the aim of ease of living with the introduction of E-Rupi.

E-Rupi is a cashless, contactless, voucher-form digital payment system developed by National Payment Corporation of India (NPCI) on Unified Payment Interface (UPI) in collaboration with Department of Financial Services, Ministry of Family Health & Welfare and the National Health Authority launched via video conference on 02 August 2021.

What is E-Rupi?

E-Rupi is a cashless and contactless digital payment E-voucher in the form of a QR code or SMS string which will be delivered directly to the user/beneficiary mobile phone and upon single click of the link, funds will be directly transferred to their bank account.

How E-Rupi works?

The users of this one-time payment mechanism will be able to encash the E-voucher without a card, digital payment app, or online banking service as it is not associated with any application or mobile banking. Thus, anyone with a mobile can use the E-Rupi independently.

In this mechanism, the user/beneficiary will be required to share the QR Code or link through SMS to the merchant and upon scanning the QR Code or clicking on the link a verification code will be sent to the user. Upon sharing of the verification code with the merchant, transaction will be completed.

This voucher will be sent by the Government directly to the beneficiary, which will do away with the process of depositing cash in the banks. It claims to be a much secured mode of transaction as it has two-factor authentication process and the details of the beneficiaries completely confidential.

Further, E-Rupi has been termed as a “person and purpose specific payment solution“ because for example, if E-Rupi voucher is created for payment of fuel then such E-Rupi vouchers can be used for payment of fuel only.

Need of E-Rupi

The app has been launched with a view to reduce leakage in welfare programmes and policies which will further reduce the possibilities of fraud and corruption. This has been made possible since there is neither interference nor presence of any middlemen who can defile the purpose of the whole initiative. It can be issued for targeted use only and with absolutely no usage of cash. It has further mitigated the crimes committed in the name of funds and trusts.

Banks that will use E-Rupi

The concept of E-Rupi voucher is a step towards the vision of good governance. It is expected to be a revolutionary step in the direction of assuring “leak-proof” delivery of welfare services.

InfrasoftTech has provided an E-Rupi technology stack to banks to provide these facility and eleven banks including both private and public have come forward to support this new initiative.

The following banks have e-coupons of both insurance and redemption:

1. Axis Bank
2. SBI Bank
3. ICICI Bank
4. HDFC Bank
5. Punjab National Bank
6. Bank of Baroda

However, on the other hand, the following banks can only issue E-Rupi vouchers and the option to redeem the E-Rupi vouchers is not available at the following banks:

1. Canara Bank
2. IndusInd Bank
3. Kotak Mahindra Bank
4. Union Bank
5. Indian Bank

Good that E-Rupi brings to FinTech World of India

The prime benefit of E-Rupi is that it is a cashless secured transaction. Users will be able to redeem the voucher at the service provider without a card, digital payments app, or online banking access. There are various other notable benefits that can be enjoyed by-

• Corporations– E-Rupi can be utilized by corporates as a part of their CSR Schemes or employee welfare scheme. This will also reduce end-to-end digital transaction and physical issuance which will mitigate the cost. Since, these vouchers are redeemable, they can also be tracked by the issuer. These vouchers can be leveraged by private banks for their employee welfare schemes and CSR programmes.

• Hospitals– Serving the very purpose, it is easy and secure as the voucher shall be authorised only after the code sent to the beneficiary has been verified. Since it’s a cashless transaction, the hassle of handling cash or card is over. Due to the pre-blocked quantity, the coupon can be redeemed in a few steps and has a lower decrease rate.

• Consumer– It is a two-step redemption process. Since it is contactless, the beneficiary is exempted from carrying any print of the voucher. It ensures high security as the beneficiary need not share personal details while redeeming the vouchers. It provides services in absence of a digital presence or bank.

Unforeseen Challenges of E-Rupi

In spite of emerging as a highly promising move of Government, E-Rupi might consist possible uncertainties and bottlenecks. The primary hurdle could be the lack of awareness and user-friendliness. E-Rupi is completely based on mobile phones and even though India has witnessed a major upheaval in the usage of smartphones, it cannot be blindly assumed that the maximum percentage of the population will be aware of how to use this e-voucher. A proper understanding and knowledge is required to ensure that the majority of the population knows how to use the e-voucher.

Another potential challenge can be the increase in scams through the infringement of privacy of users’ data. Digital frauds and data theft is very much prevalent in India and in no time the same might increase as the common people might not be aware about the technicalities. Although E-Rupi transactions are claimed to be secured since details of beneficiaries are not disclosed. However, with the beneficiary not required to disclose its identity, these vouchers are likely to be claimed by other people.

Certain bottlenecks can be expected in the verification process, access of QR codes or delay in receiving SMS. However, all these challenges can help to understand the risks and regulatory bodies can work on them in the near future.

The very novel and highly appreciable act of Government might come with unforeseen challenges and how ready the regulatory and governing body is ready to deal with them is yet to be witnessed. 

AMLEGALS Remarks

E-Rupi is undoubtedly a milestone in the Indian economy. With India, surpassing China and becoming second largest FinTech economy after US, E-Rupi was a necessary step to not only protect its citizens from fraud and vile practices of corruption, but as an emerging leading nation, to also provide a platform to enable investment of money in welfare schemes and programmes initiated by the Government.

With the rife impact of the pandemic domestically and globally, it has opened the possibility of commission of monetary crimes worldwide and E-Rupi seems to be the apt solution in this situation. The initiative is prima facie consumer friendly and provides security that makes it more viable and trustworthy.

E-Rupi was a much-needed change as it is an indigenous app for the online payment and further development in the ‘Make in India’ programme which will shape the Indian economy for good and help boost the Indian economy.

For any query or feedback, please feel free to connect with arushi.vyas@amlegals.com or tanmay.banthia@amlegals.com