Monday, September 26

Is e-RUPI Non-Digital Payment for Welfare another Failed Innovation?

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On August 6, 2021, Prime Minister Narendra Modi launched e-RUPI. According to the public statement issued by the Indian Ministry of Finance, e-RUPI is a cashless and contactless instrument for digital paymentAccording to the plan, the eRUPI voucher is intended to make Direct Benefit Transfer (DBT) more effective as India strives to achieve 100% digital economy and digital governance. PM Narendra Modi said that e-RUPI is symbolic of a progressive India connecting people through technology.

e-RUPI is like an e-voucher that beneficiaries will receive in the form of a QR code and SMS-string-based voucher enabling direct fund transfer to bank accounts. Any government agency and corporation can generate the e-voucher via their partner banks. Once a beneficiary shows the QR code or the SMS message to a merchant, they can scan it to generate a verification code for the beneficiary to authenticate. 

This one-time payment facility is person or purpose-driven to be determined by the Government of India. The National Payment Corporation of India (NPCI) has developed e-RUPI in association with the other Indian government departments, including the Department of Financial Services, the Ministry of Health and Family Welfare, and the National Health Authority. Participating banks include HDFC Bank, Axis Bank, Punjab National Bank, Bank of Baroda, Canara Bank, IndusInd Bank, ICICI Bank, and the State Bank of India. 

e-RUPI non-digital payment for welfare is expected to revolutionize the digital payment space by ensuring a leak-proof delivery of welfare services. E-RUPI will evolve into a standard technology in the next several years, eliminating intermediaries between a government fund disbursal and the final beneficiary. Suppose there is a new government program offering a subsidy to a target community. In that case, there will be e-vouchers issued to the community members who can visit the concerned service provider, present the QR code and avail the subsidy via verification code authentication on their basic phone. 

India is indeed invested in going fully digital. Still, with an ever-expanding population, it is hard to achieve the goal without the direct participation of the grassroots, where people still do not have Internet banking accounts or a smartphone to leverage every established digital payment application. Furthermore, in rural India, the Internet is still a challenge. So, the advent of e-RUPI is more inclusive and socially impactful. Users do not require a debit/credit card, no digital payments apps, or internet banking access to redeem the new e-voucher. It also boasts of data privacy for every beneficiary.

Using the same infrastructure, the pre-paid e-RUPI social welfare payment voucher technology, the Government of India can issue a direct subsidy and sponsor COVID-19 vaccination. The vision behind e-RUPI is to reach 190 million unbanked citizens and initiate them to a digital financial system to close the digital gap. The technology ensures fair and distributed access to financial, healthcare, and welfare services to every country’s citizens via blockchain security.

Like any other technology developed with the best intentions, e-RUPI has its set of challenges, which will become clear as the technology is announced ready for the market. So, the one obvious challenge is when the same Privacy feature ends up counter-productive. When user details are masked, there is a likelihood of exploitation. An e-voucher issued to a person on his phone might get deleted, or a person might use multiple phones for multiple e-vouchers. However, these are the underbelly of any new technology until the system is more intuitive and intelligent to prevent fraudulent activities.

Before India, e-RUPI non-digital payment for welfare exists in the US, South Korea, and several other countries where the Government extends social welfare services. Back in 2008, when the Sub-Prime recession hit the US, the government-sanctioned fund for social welfare was delegated to the end beneficiary through local authorities. They were known as Food Stamps but non-digital. In India, as per government officials, e-RUPI can boost India’s GDP by almost 14 percent, which will mean a huge transition in technological adoption in a country already building world-class products. 



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