A new digital currency called e-Rupi was launched by the Reserve Bank of India (RBI) on December 1. Although it will initially only be accessible to people in the four cities where the pilot will be conducted (Mumbai, New Delhi, Bengaluru, and Bhubaneswar), this will likely change in the near future. But what, precisely, sets UPI apart from e-Rupi?
The five key distinctions between UPI and e-Rupi/CBDC are as follows:
Maintaining anonymity is possible
Digital currency transactions may provide the same level of privacy as cash ones. The Reserve Bank has requested that financial institutions conceal digital rupee transactions of little value. Bank employees have said that after Central Bank Backed Digital Currency Retail is transferred to consumer wallets, the banks will no longer monitor or record these transactions. As it is, clients are required to provide their permanent account number for most cash transactions above Rs 50,000. While no official cap has been placed on the value of digital rupee transactions, it is widely assumed that any retail transaction below Rs 50,000 would not be recorded. For tax reasons, any deals worth more than Rs 2 lakh would need to be declared.
Smartphone-free transactions
The widespread use of the e-rupee in rural and outlying regions is expected to be facilitated, according to experts, by the fact that the currency may be used for offline transactions on feature phones. Since the recipient would get the electronic rupee coupon by short message service (SMS) or quick response (QR) code, this is the most efficient method. This will allow for its usage even in places with spotty or no internet service. Also, if it's an SMS, even those without smartphones may use it.
There is no need for a bank account
Although experts noted that a bank account and a debit card are required for UPI transactions, an e-Rupi wallet may be used without any of these things, making it a more convenient payment option. "With a retail CBDC, consumers should be able to trade without any bank involvement (just as with actual currency), and it's a digital transfer from people to people directly without a bank middleman. According to Infibeam Avenues Ltd. Executive Director Vishwas Patel, CCAvenue would have the same denominations as actual currency.
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All one handle
The UPI ID or handle differs across institutions and services. While the UPI ID that is generated when attaching the same bank account to two distinct platforms might be different, the e-Rupi ID will remain consistent. “The digital rupee will be operated by RBI and not by bank intermediaries in the case of UPI where each bank has a different UPI handler,” said Kunal Chowdhry, CEO of Apollo Singapore Investments. Each e-rupi transaction will only need one public key (address).
Physical currency backup is not required
Physical cash is used to support UPI transactions. If there are insufficient money in the user's bank account, the transaction will fail. In contrast, the e-rupee may be used to make digital payments instead of traditional money or cash. The RBI-issued digital rupee is fully legal money in India. There is no need for physical currency to back it up.
