An alternate mode?

The Prime Minister launched the e-voucher based digital payment system e-RUPI on August 2. This is expected to boost digital payments and control corruption to a great extent. According to the PM, the existing beneficiaries of various social schemes will get the maximum benefit from this new payment system. It can be used as an alternative to Direct Benefit Transfer (DBT). This will help beneficiaries to get cash and other facilities transparently and safely.

The PM also said that at present, DBT ensures that the money reaches the right beneficiary. The government is saving billions and trillions of rupees. More than 90 crore citizens have benefited from DBT in schemes like PM Kisan Samman Nidhi, Public Distribution Services, LPG subsidy etc.

Like the BHIM-UPI payment system launched in December 2016, e-RUPI is considered a major development in the direction of digitisation. It is worth mentioning that the UPI system has completely changed the payment process in India. Due to its inherent advantages, today it remains the most preferred mode of making digital payments among all classes. In July 2021, three billion transactions were done through UPI, amounting to Rs six lakh crore.

E-RUPI is a prepaid e-voucher, developed by the National Payments Corporation of India (NPCI) in association with the Department of Financial Services, Ministry of Health and Family Welfare and National Health Authority. Departments other than NPCI have been involved in the development of e-RUPI because they enable DBT to the largest number of beneficiaries under various social schemes.

E-RUPI is the first step towards developing digital currency. This is like a gift voucher that can be availed at select branches of the bank without credit or debit card or mobile app or internet banking. It is a QR code or SMS string-based e-voucher, which is sent directly to the mobile of the beneficiaries.

Through e-RUPI, the departments or institutions related to government schemes can directly benefit the beneficiaries without making physical contact with any person. The system will also ensure that payment is made to the service provider only after the transaction is completed. Being a prepaid system, e-RUPI will enable timely payment to the service provider without involving any intermediary in the process.

The utility of this system is multifaceted but its most important objective is to make online payments easy and secure. This allows transactions to be done without cash. There are no middlemen in this system as it directly connects the payer to the payee. This ensures that the benefits of government schemes will go directly to the beneficiaries, reducing the cases of corruption. The digital voucher can also be used by companies in the private sector for the welfare of their employees and in the discharge of corporate social responsibility. It can be used to meet the payment needs of beneficiaries under schemes like TB eradication, Ayushman Bharat, fertilizer subsidy etc. Any company can take advantage of this facility to vaccinate its employees during the Corona period. The beneficiaries will get free vaccines at the identified hospital only if they show e-RUPI SMS or QR code.

Bank will issue e-RUPI vouchers. If any corporate or government agency has to give an e-RUPI voucher to a particular person, then it has to approach the government or private bank. The beneficiary will be identified through the mobile number and the service provider will be allotted a voucher by the bank, which will be issued in the name of a particular person. Only a person in whose name this e-RUPI voucher is issued will be able to take the payment.

The "e-voucher" system is prevalent in the field of education in America, through which the government pays students directly through their parents so that there is no hindrance in the education of the children. Apart from America, the e-voucher system is also prevalent in schools in countries like Colombia, Chile, Sweden, Hong Kong etc.

The Reserve Bank of India is working on a plan to introduce digital currency. However, the e-RUPI voucher is different from virtual currency, as it is a voucher-based payment system. Nevertheless, the launch of e-RUPI will help in understanding the options for strengthening the digital payment infrastructure following which further action could be taken.

It is not yet clear what the government or private institutions or corporates will do with respect to the beneficiaries who do not have mobile phones because, as of January 31, 2020, 1,156 million people were using mobiles in the country but the number of smartphone users was about 500 million. To meet this shortfall, the government may continue the DBT scheme along with the e-RUPI system for some more time. Furthermore, the government will have to educate the poor and underprivileged people about its benefits. The government will also have to educate the beneficiaries to not delete the QR code or SMS on their mobile phones by mistake because nowadays, about 20 to 25 unusable messages come in mobile phones every day. As a result, users of mobile phones have to delete unnecessary messages regularly to maintain space in the mobile.

Presently, 315 DBT schemes are being operated by 54 ministries. However, not all plans are applicable to everyone. Nevertheless, the number of beneficiaries of all the implemented schemes is large. According to National Informatics Centre (NIC) data, 7.32 lakh crore transactions have been done so far under DBT schemes and around Rs 1.42 lakh crore have been transferred to the beneficiaries' bank accounts.

Banks have the most important role to play in the implementation of the e-RUPI voucher system but they are already burdened with the task of implementation of social schemes. With the introduction of this new system, the workload on banks will increase even more. There is no proposal to increase the number of employees of banks at present, due to which banks will face difficulties in implementing this new system.

It can be said that the e-RUPI voucher is one such payment system which can be used in future as an alternative to DBT. Currently, through DBT, the amount is transferred directly to beneficiaries' bank accounts whereas, through e-RUPI, an equivalent amount voucher can be sent directly to the mobile phones of the beneficiaries in the form of an SMS string or QR code. Beneficiaries will be able to take payment by showing the SMS or QR code at the identified branch of the banks. If the e-RUPI voucher is issued to take advantage of any facility, then the beneficiary will have to go to the said institution or department to take advantage of the targeted facility, because the e-RUPI voucher can be used only for the targeted purpose. It cannot be used for any other purpose. For example, if e-RUPI is issued to get vaccination done, then it can be used by the beneficiary only at the vaccination centre.

Views expressed are personal