E-RUPI & Governance

GS-3: Awareness in the fields of IT
GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

In news: Recently launched by the PM Modi, e-RUPI is a digital prepaid, purpose- and person-specific payment utility.

How will e-RUPI work?

e-RUPI is basically a digital voucher which a beneficiary gets on his phone in the form of an SMS or QR code.
It is a pre-paid voucher, which he/she can go and redeem it at any centre that accepts its.
For example, if the Government wants to cover a particular treatment of an employee in a specified hospital, it can issue an e-RUPI voucher for the determined amount through a partner bank. The employee will receive an SMS or a QR Code on his feature phone / smart phone. He/she can go to the specified hospital, avail of the services and pay through the e-RUPI voucher received on his phone.
e-RUPI will connect the sponsors of the services (govt) with the beneficiaries (BPL Card holder) and service providers (hospitals) in a digital manner without any physical interface.
Thus e-RUPI is a one-time contactless, cashless voucher-based mode of payment that helps users redeem the voucher without a card, digital payments app, or internet banking access.
The system has been built by National Payments Corporation of India on its UPI platform, and has onboarded banks that will be the issuing entities.

e-RUPI’s Application in Vaccination

Its immediate and first-use case can be to facilitate cashless service at paid Covid vaccination centres (CVCs).
For instance, corporates and philanthropies can buy services in bulk to vaccinate employees and those in need.
The intended beneficiaries will receive an SMS or QR code on their feature/smartphone, redeemable for cashless vaccination at participating centres.

e-RUPI’s Application in PDS

The inefficiency of the programme is rooted in high overhead costs, leakages, exclusion and inefficiencies.
A food-specific e-RUPI voucher will allow beneficiaries to buy rations from an outlet of their choice.
e-RUPI could make the PDS programme more efficient.
One Nation, One Ration Card has the potential to make the redemption of the voucher at market price by merchants within and outside the PDS network.

e-RUPI’s Application in Fertilizer Subsidy

e-RUPI will enable farmers to buy fertiliser at nominal prices with direct credit of the subsidy amount into the account of the authorised dealers.

e-RUPI’s Application in Education

Identified students receive vouchers to pay school fees and expenses at empanelled institutions of their choice, public and private, which compete to get full fee-paying students.
The resultant option and competition benefits students and schools while enhancing transparency and accountability.

e-RUPI’s Application in Ayushman Bharat healthcare initiative.

Identified beneficiaries will receive e-RUPI vouchers of designated value tenable at empanelled healthcare facilities, providing them portability and facility choice.
The service provider will benefit from the immediate payment.

Significance of e-RUPI

Benefits to Consumers: e-RUPI does not require the beneficiary to have a bank account, a major distinguishing feature as compared to other digital payment forms. It ensures an easy, contactless two-step redemption process that does not require sharing of personal details either.
Another advantage is that e-RUPI is operable on basic phones also, and hence it can be used by persons who do not own smart-phones or in places that lack internet connection.
Benefits to Sponsors: e-RUPI is expected to play a major role in strengthening Direct-Benefit Transfer and making it more transparent. Since, there is no need for physical issuance of vouchers, it will also lead to some cost savings as well.
Benefits to Service Provider: Being a prepaid voucher, e-RUPI would assure real time payments to the service provider.
Huge Potential: Built on the UPI platform, e-RUPI is easy to scale by the issuer. In the days to come the user base of e-RUPI is expected to widen, with even private sector using it to disburse non-cash benefits to employees and support focussed CSR programmes. MSMEs can adopt it for Business to Business (B2B) transactions. Later, individuals could use it for gifting.
Enhances efficiency of Governance Delivery: It can bring ease and simplicity of UPI to government welfare measures. As a one-to-many payments facilitator, it will help the government sharpen targeted welfare programmes.

Way Ahead

The adoption of e-RUPI in various government programmes will enhance business efficiency, simplicity, transparency, and accountability in these programmes.
Making the distribution and acceptance of e-RUPI incentive-compatible is recommended, as demonstrated by the popularisation of Aadhar for multiple governance initiatives.
Light regulation and the opening of e-RUPI to competition will spur innovation and adoption. All banks, small and big, NBFCs, non-bank PPI issuers, and telcos may be allowed to issue it later

Connecting the dots:

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