E-Rupi limit hike to push offline digital payments
MUMBAI: The increase in e-Rupi voucher limit to ₹1 lakh will give an impetus to digital payments in the offline mode and allow reach of government’s direct benefit transfer without bank accounts, experts said.
On Thursday, the Reserve Bank of India (RBI) announced increasing the cap on e-Rupi vouchers issued by governments to ₹1 lakh per voucher from ₹10,000 and also allowed one voucher to be used multiple times till completely redeemed. Launched in August 2021, e-Rupi was meant as a cashless payment product for covid-19 vaccination. Backed by the unified payments interface (UPI) platform, an e-Rupi voucher allows users to redeem it without a card, digital payments app or internet banking access, at the merchants accepting UPI e-prepaid vouchers.
“It will ensure better digital delivery of benefits of the central and state government schemes to the beneficiaries. Hence, it is likely to play a major role in strengthening direct benefit transfer (DBT) to citizens at the last mile, making it more transparent,” said Anand Kumar Bajaj, co-founder, managing director and chief executive of PayNearby. Bajaj said that unlike other digital payment formats, e-Rupi does not require beneficiaries to have a bank account. Another advantage is that e-Rupi works on basic phones also, and hence it can be used by people who do not own smartphones or in places that lack an internet connection, thereby promoting offline payments, he added.
In January, RBI released its “framework for facilitating small value digital payments in offline mode”, following pilot testing by some entities from September 2020 to July 2021. On August 6, 2021, RBI had permitted a pilot scheme to encourage technological innovations that enable small value digital transactions done offline. Experts said that in addition to vouchers issued by the government, extending this new cap to other business-toconsumer use-cases should also be considered, by improving the acquiring infrastructure for e-Rupi and integrating it with existing point of sale (PoS) systems. “This will also encourage its use by private corporates and for other customer segments as well, such as larger value corporate gifting, transit/payroll/student cards, forex travel cards, among others. e-Rupi’s key benefit for governments is in enabling penetration among the unbanked and feature phone users, allowing issue without needing the recipient’s bank account or KYC,” said Reeju Datta, co-founder, Cashfree Payments. Others said there could be some future linkages between the e-Rupi and the proposed digital currency slated to be issued in fiscal 2023. According to Dinesh Khara, chairman, SBI, the enhancement of cap under e-Rupi could facilitate a faster adoption of digital transactions, that could eventually usher in a roll out of digital rupee.
The central bank will start issuing the much-awaited digital currency in fiscal 2023, finance minister Nirmala Sitharaman ann-ounced in the budget, a move that the government believes will give an impetus to the digital economy. The government also proposed to amend the RBI Act to include the central bank digital currency (CBDC).