Recently RBI has relaxed some constraints with respect to e-RUPI.
How successful are innovations made in case of digital payments?
The National Payments Corporation of India (NPCI) has systematically established a highly capable multi-modal electronic payment infrastructure for India.
It includes
ATM interchange (NFS)
Domestic card scheme (RuPay)
Direct debit system (NACH)
Real-time interbank payments (IMPS)
National ID-based payments (AEPS and APBS)
Bill payments (BBPS)
Toll collections (NETC FASTag)
Mobile payments (UPI).
Especially the scale and pace of adoption of UPI stunned many observers across the world.
These innovations have been recognised globally and are being emulated by other countries.
The arena of real-time payments continues to see tremendous activity even in those countries that have been showing slow progress.
Introduction of the electronic voucher-based payments (e-RUPI) last year was another move that reinforced this leadership.
What is e- RUPI?
e-RUPI is a one time pre-paid digital voucher which a beneficiary gets on his phone in the form of an SMS or QR code.
These electronic vouchers will have an associated value and an associated purpose.
It cannot be encashed in any other way.
The beneficiary can go and redeem it at any centre that accepts its.
It helps users without a bank account, debit /credit card, digital payments app, smart phone or internet banking access.
The vouchers can be issued electronically as messages to feature phones.
How it improves the targeted delivery of benefits?
The e-RUPI launch was directed at the neediest sections of the society, whose access to technology was still limited.
It makes digital payment more inclusive.
The backdrop against the launch of the e-RUPI (initially called the UPI Prepaid Voucher) was during the time of pandemic.
A leakage-proof mechanism to deliver targeted benefits in real time was felt necessary.
e-RUPI’s was used for targeted delivery of Covid-19 relief measures.
The most obvious application of this was distribution of medical aid
A large base of hospitals was enabled to accept these vouchers—be it for vaccinations or treatment for medical conditions.
How can we enhance its usage?
This can be extended to other benefits as well like the PDS or other nongovernmental channels.
The end-uses of this capability for administration are numerous.
It can be used to cover food subsidies, agricultural subsidies and various sector-specific benefits.
Using this to deliver benefits for MSMEs and individual businesses greatly improves them.
While the initial focus was for government measures, there was also a facility for the corporates to use this facility to distribute benefits to their employees, contractors and partners.
Authorised issuers of these vouchers continue to be banks
Banks need to use this opportunity by making it easier for corporates to access issuance capabilities via digital channels.
Also allowing sophisticated usage monitoring and reporting would make it a very attractive proposition for the corporates.
What were the issues faced while using e-RUPI?
2 major constraints were imposed at launch
Maximum value of a single voucher could be Rs 10,000.
They are single use vouchers. Even if partially availed would lapse on first-use.
While it is good to have these restrictions during launch to allow the system to stabilise, overtime the restrictions limits its adoption.
Multiple vouchers have to be issued for larger amounts even though the recipient was an individual.
What are the recent reforms?
The RBI as part of the 2022 Monetary Policy update relaxed these restrictions
The value-limit for vouchers has been increased to Rs 1 lakh.
e-RUPI now becomes a multi-use voucher that can be used till the value is reduced to zero.
Now e-RUPI gets closer to being a non-reloadable prepaid instrument with its use restricted to specific purposes or at specific merchant categories.
No significant cost associated with issuance and thus can be an economical alternative to prepaid cards like gift vouchers, food and meal vouchers.
