e-Rupi launched on Monday by the Prime Minister Narendra Modi, is yet another step taken to bring a shift in the cash-loving mindset in India as it would be cashless and contactless. It would further reduce the income inequality in India through the introduction of e-RUPI. But, what is e-RUPI and how does it work?
Let’s understand it in simple words. It is a “QR code or SMS string-based e-voucher” that will be accessed through the mobile of beneficiaries. It acts in the manner of prepaid vouchers that could be redeemed and paid to service providers.
This helps the user to skip the exaggerating steps while using a card, internet banking or digital payment apps. The e-RUPI is said to work for the poor section of the economy and take up less time while making transactions as it does not necessarily need a smartphone or digital payment app.
The e-RUPI payment service will enable users to redeem the voucher without a card, digital payments app, or internet banking access. At the moment, e-RUPI is aimed to be used for delivering services under schemes meant for providing drugs and nutritional support under mother-and-child welfare schemes, TB eradication programmes, drugs and diagnostics under schemes like the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, etc.
While launching the scheme, the Prime Minister suggested in his speech that even non-government entities could use this.
The e-RUPI is a big improvement on human interface-based benefit delivery as well as it transaction is fully trackable, While there have been a many schemes launched over the years to benefit the poor, most have suffered due to misidentification of beneficiaries (either by error or deliberately, to divert the funds), corruption and leakages, as well as rent extracted by officials and middlemen for delivering the intended benefit, not to speak of the struggles the poor and illiterate face with India’s forms, records and identity-obsessed bureaucracy. For the service provider, it ensures timely payment, without the need for official intervention (and rent extraction), since the voucher is actually a pre-paid instrument.
Similarly, the private sector can also leverage the new system for employee welfare and corporate social responsibility programmes. The Prime Minister’s Office (PMO) said the new digital payment platform is expected to be a revolutionary initiative in the direction of ensuring a leak-proof delivery of welfare services.
Such pre-paid instruments for delivering benefits are not a new idea in India and elsewhere. Several countries around the world use food stamps, for example, to provide food assistance. Even the private sector uses them extensively to give benefits to its employees – food and lunch coupons and fuel or transport vouchers are examples of this. In India too many companies like LIC of India provide its employees such cashless vouchers under its welfare scheme but that are in the shape of digital cards and need a digital interface to make the select few outlets. To that extent, a cashless system using the ubiquitous mobile phone as a delivery vehicle is a step forward in this direction. It also introduces trackability and prevents misuse, since the transaction is completed only after the service is provided, although here too, the system is not foolproof.
