India launches new digital payment solution that doesn’t require app or bank account

The Indian government has launched a new digital payment solution called e-RUPI, a combination of rupee and UPI – unified payment interface.

Touted as a person- and purpose-specific digital payment solution, e-RUPI aims to give targeted, transparent, and leakage-free delivery of benefits.

These three-wheelers are very light and can usually carry four passengers. However, it’s not uncommon to see a dozen children crammed into one on the way to school. / Photo credit: Pexels.

E-RUPI is essentially a prepaid voucher shared with beneficiaries for a specific purpose or activity by organizations or the government through SMS or a QR code. In this process, the assigned beneficiary can only redeem the voucher. Also, the issuer can track the redemption of the voucher.

The service is currently available at select hospitals in the country. The process ensures easy redemption, as it involves a two-step (one-time-password-like) verification process, according to the National Payments Corporation of India (NPCI), an umbrella organization for operating retail payments and settlement systems.

NPCI also notes that the beneficiary doesn’t need to have a digital payment app or bank account to avail the benefits. They also don’t need to share personal details while redeeming the voucher.

Besides state-run bank State Bank of India, several leading private institutions including HDFC Bank, ICICI Bank, and Kotak Bank, have gone live with the e-RUPI.

Preview of e-RUPI / Photo credit: NPCI

India’s experiment with e-RUPI comes after a successful run with digital payment services such as UPI. Top peer-to-peer and merchant payments platforms such as Google Pay, WhatsApp Pay, and Paytm also leverage the instant payment system.

Driven by the proliferation of smartphones and cheap 4G data prices, India’s UPI has grown exponentially over the years. In July 2021, UPI saw more than 3 billion transactions, amounting to 6.06 trillion rupees (US$80 billion).

That said, the deployment of digital payments has also helped the Indian government directly transfer cash benefits to millions of people in the country. A previous cash-based system led to leakage of money, depriving many beneficiaries of their share.

The Indian government currently uses direct benefit transfer to instantly provide funds to people. The e-RUPI, however, is likely to make the process more targeted and allow the funds to be used for their allocated purpose.

Currency converted from Indian rupee to US dollar: US$1 = 74.32 rupees.