e-RUPI: A game-changer or policy incrementalism?

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India’s digital payments ecosystem is experiencing dramatic growth. ACI Worldwide’s new report shows India retaining the top spot with 25.5 billion real-time payments. Innovating technologies, new business models, and financial instruments are rapidly shifting consumer preferences toward digital payments.

As reported by the Reserve Bank of India’s Annual Report 2020-2021, the outbreak of Covid-19 had pushed the country towards less-cash alternatives, an ecosystem developed through open innovation that was already reaping many benefits. Since the success of the Unified Payments Interface (UPI), India’s first interoperable, mobile banking system, the National Payments Corporation of India (NPCI) announced the launch of e-RUPI, often referred to as India’s first step towards digital currency. Rather than a high-tech innovation, the e-RUPI takes a small, but sure step towards addressing current barriers to digital financial inclusion.

A mobile-based payment system or a voucher-based system is neither truly novel. Even so, e-RUPI is an interesting development due to its variety of features and factors. A digital pre-paid voucher designed to target the purpose and person(s) for a particular transaction, e-RUPI promises to plug theft in welfare schemes, minimise delays and facilitate beneficiaries’ access to benefits. It also uses SMS-based strings to conduct transactions, eliminating the need for smartphones or for beneficiaries to have bank accounts. For getting the service, one needs only their mobile phone number.

Another angle to consider is the identity ecosystem. The e-RUPI will rely on existing identification and verification tools since the beneficiary’s mobile number will be the point of action. Despite not being confirmed, it has been suggested that beneficiaries will be identified by mobile numbers linked to Aadhaar. India’s JanDhan-Aadhaar-Mobile (JAM) trinity has had enormous successes, however, to overlook the remaining challenges arising from infrastructure and institutional deficiencies will be myopic. Without addressing these problems, introducing new technology-based welfare instruments rarely solves a public policy challenge. The e-RUPI will probably point out the existing gaps more clearly, but unless the enabling environment is built, it may not achieve its goal of inclusion.

Last but not least, we must promote digital literacy to enable safe and inclusive adoption of new instruments such as e-RUPI. Even the increase in UPI payments was accompanied by a slew of scams involving QR codes and other tools that targeted consumers. It is possible to mitigate some of these risks using e-RUPI, but for the uninitiated, it can be easily manipulated. The digital literacy campaign must focus on creating a culture of privacy, protecting personal information, and educating beneficiaries on the safe and secure use of digital instruments. Collaboration with all stakeholders in the ecosystem is also necessary for this area. The inclusion goals e-RUPI has set for itself can only be achieved by reaching out to the marginalized and underprivileged communities through targeted campaigns.

Due to existing challenges in the ecosystem, e-RUPI is not a game-changer, it is definitely a step in the right direction. Its success depends on a favourable environment and enabling circumstances, which will eventually push India closer to the digital frontier.

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