E-Rupi or digital rupee: Advantages and disadvantages

E-Rupi or digital rupee: Advantages and disadvantages

Digital rupee or E-Rupi; Everything you need to know

E-Rupi or digital rupee has taken a place since a threat of cryptocurrencies started concerning the government. Cryptocurrencies are all about replacing currency authorized by the central bank of countries. The covid pandemic played a decent role in the launch of E-Rupi, as it was a peak time when India was heading towards adopting digital payment methods massively. 

In order to assist the development of Fintechs, the government connected a number of services with programs like IMPS, e-KYC, UPI, and the usage of Aadhaar as an identification mechanism. India's digital payment market has been completely transformed by fintech projects like PhonePe, PayTM, and Razorpay. 

The dream of making India a cashless economy has almost come true, the only one that can replace hard cash fully is E-Rupi. The Indian government launched E-Rupi on Aug 1, 2022. Here is everything you need to know about E-Rupi. 

What is E-Rupi?

E-Rupi is an e-voucher-based currency that can be used without having a smartphone. The technology has been introduced to make sure that the population that couldn’t afford smartphones can also make use of online payment services to help the economy become a cashless economy. You can pay or receive money by using SMS only. Money will get transferred to your bank account directly by making a payment by using SMS. 

Advantages of using E-Rupi

[1] 32% of Indian consumers do not have access to mobile banking as it can be used through smartphones only. E-Rupi can be used through the used basic featured phone too, through SMS. 

[2] No internet is required, which means you can pay digitally in the places where there is a network issue. 

[3] It reduces the cost of printing money for the government. 

[4] E-Rupi is easier to track than physical currency, hence, eliminating the risk of illegal or prohibited activities in the country. 

[5] Help in reducing the risk of infecting diseases like Covid-19 because of its contactless payment method. 

Disadvantages of using E-Rupi

[1] The first and foremost disadvantage of using E-Rupi is you will not get interest on saved money. It has to be used as a physical currency only. 

[2] Cybersecurity is always an issue of digitisation in the country. The government needs to alert the tech agency as a high priority as all the money can be gone if bugs couldn’t be fixed. 

[3] There is a lack of regulatory framework clarity for citizens. The government needs to come up with advertise a proper framework for using E-Rupi.

[4] The risk of theft will not be reduced by introducing E-Rupi as well. Since it is not linked with KYC reforms, anyone can steal your E-Rupi by redeeming e-vouchers. 

There are various advantages and disadvantages of E-Rupi as every new transformation has, but digitisation always proved to overcome the disadvantages by increasing its utilities for the public in general. 

What if you use UPI instead of E-Rupi? 

UPI and E-Rupi are different in that you need to do KYC authentication and must have a smartphone for using UPI services. You will be getting interest if you use UPI as a digital payment method as money will be in your bank account only. 

While in the case of E-Rupi, Your money will be in digital form in e-vouchers not in your bank account. You need to redeem it through your bank account. 

Translation limit of UPI and E-Rupi.

There is a limit to the amount transferred by UPI. You cannot send more than ₹1,00,000 in one day across all UPI apps and not more than 10 times in one day across all UPI apps more than ₹2,000 from someone. 

The transaction limit of E-Rupi is Rs 10,000 per voucher. 

The major advantage of E-Rupi is that the government will have a track of every transaction you made, which will lead to transparency between the general public and the government. It will not only help the government keep a record of financial transactions in the economy but also help citizens in availing of various subsidies and grants announced by the government.

When the government has your record, it will end the role of an intermediary between the government and citizens. There will be a direct transaction between both parties, hence, reducing the probability of fraud and corruption in government departments. 



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