How e-RUPI Will Affect Payments System in India as Government Goes All Out Against Crypto Assets


Recently, following the Reserve Bank of India’s (RBI) statement on a central bank digital currency (CBDC), the e-RUPI digital currency has been launched.

The e-RUPI is a digital payment technology to be used for purchasing certain goods or services. It comes in the form of pre-paid digital vouchers, directly delivered to the phones of beneficiaries and cannot be converted to cash or passed to other individuals. To transact with this digital token, a bank account, credit card, or mobile app is not required.

Abhinav Sinha, CEO of EKO said that the e-RUPI is a payments instrument that could be implemented for diverse purposes. The digital instrument also works with both smartphones and non-smartphones, and its features can be used without a bank account. The e-RUPI can be implemented by lenders as well to lend credit to borrowers as the usage of the funds can be defined.

Praises For e-RUPI

The e-RUPI has received lots of praise thanks to its numerous features. With about 80% of the Indian population having no mobile connection, the e-RUPI may result in a revolution in the digital payment system in India.

As reported, payments can be made via a QR code for smartphone users or an SMS string-based e-voucher for non-smartphone users. Also, this digital token can be used for specific purposes. It could be for COVID vaccines at government centers. The e-RUPI is ostensibly implemented and tracked well, thus, it may have substantial implications for digital adoption, transparency, and social initiatives.

This innovative digital instrument is in a multi-party configuration that allows for computerized transactions. In the conventional cash economy, once a customer holds cash at hand, the purpose of the bank loses its visibility. This is quite different for the e-RUPI initiative, as the bank is aware of its purpose and as a result endorses saving digital token vouchers for the same purposes.

India’s Government Against All Crypto Assets

The Indian government has recently promised to take all measures necessary to eradicate and stop citizens from using any form of crypto-assets to fund unlawful transactions.

Speaking on this the Minister of State for Finance Pankaj Chaudhary in Rajya Sabha opined that, to the Indian government, cryptocurrencies are not regarded as legal tender and are particular about eliminating the use of these crypto-assets to make illegal transactions as a medium of the payment system. According to him, the Indian administration will assess the use of blockchain technology to usher in the digital economy.

Apart from this decision by the government, a high-level inter-ministerial committee has been formed under the chairmanship of the Secretary (Economic Affairs) to study the matters concerning digital currencies. This committee has recommended that explicit actions should be carried out on private cryptocurrencies and all private cryptocurrencies, except those issued by the government, should be banned from being used as a form of transaction.

This recommendation was made following the RBI Governor Shaktikanta Das recent statement, which pointed out that there were major concerns at the Apex Bank concerning cryptocurrency trade in the market. He pointed out the discrepancies between a central bank digital currency and those traded in the market.

The central bank digital currency should be the only accommodated digital currency accepted. To him, the other cryptocurrencies traded in the market are something else. The RBI and government of India are ostensibly pursuing financial stability for the country and its citizens and the concerns around these cryptocurrencies traded in the market have been flagged to the government

However, despite the government and apex bank’s concern, there is increased excitement for cryptocurrencies. The country witnessed its first unicorn in CoinDCX. The exchange, supported by Facebook co-founder Eduardo Severin’s B Capital Group, made a total of  $90 million from investors like Coinbase Ventures, Polychain Capital,, and Jump Capital. Currently, Crypto exchange CoinDCX is now estimated at $1.1 billion becoming the country’s first crypto unicorn.

The RBI Governor Das, still mentioned that the RBI is developing a digital version of a fiat currency, and It is currently “assessing the financial stability implications of introducing such a Central Bank Digital Currency“.

What Does This Mean For e-RUPI

The e-RUPI, according to WazirX CEO Nischal Shetty, is not like other cryptocurrencies. Explaining the difference between e-RUPI and cryptocurrencies, he explained that it is not founded on blockchain. However, it lays emphasis on one of the foundational messages of blockchain-based tokens.

This new digital currency stimulates end-to-end digital transactions with no need for physical middlemen and this leads to a lesser cost of operation.

The e-RUPI allows for data privacy and security, like other cryptocurrencies, as private details are not needed to redeem the vouchers. This is apparently a necessary initiative in order to digitize India’s financial stack.

One can imagine that India will soon follow suit on Estonia’s stance towards digitization where it now hosts leading developers in the field of fintech like Modularbank which aims to bring down barriers between digital currencies and traditional finance and Bitsgap that already utilize API technologies to deploy a BTC trading bot capable of trading across 25 digital exchanges.

As a result, the government embraces this new digital instrument and is ready to implement its revolutionary features in making payments and transactions. This adoption of this new system of payment is supposed to cause a lot of changes to the payment system in India. Sally gave a list of benefits to expect from the adoption of e-RUPI, which are:

  • Greater adoption of digital payments in the digital-immune segment of the country.
  • Better last-mile delivery of welfare benefits is one of the biggest areas, be it education, nourishment, healthcare, and much more.
  • Transaction transparency – all digital payment innovations promote greater transparency and so should e-RUPI.
  • Reduced in the use of cash, particularly for distributing government benefits. This can have significant adverse tailwinds for companies like Sodexo organizations that use a part of their kitty to issue purpose-specific e-RUPI – such as learning allowance on specific portals.

This period is apparently a sensational one for the Indian fintech community, as the government has initiated a more digitized medium of accepting payment after, turning against other forms of cryptocurrencies and this enables even non-digital customers and digital-immune sections of the country to adopt digital payments.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More