The Reserve Bank of India (RBI) introduced e-Rupi, a brand-new digital currency, on December 1.It will initially only be available to residents of the four cities where the pilot will be carried out—Mumbai, New Delhi, Bengaluru, and Bhubaneswar—but this is likely to change soon.However, exactly what differentiates UPI from e-Rupi?
The following are the five main differences between UPI and e-Rupi/CBDC:
Maintaining anonymity is possible.
Digital currency transactions may offer the same degree of privacy as cash ones. The Reserve Bank has asked financial institutions to hide low-value digital rupee transactions. According to bank employees, the banks will no longer monitor or record these transactions once Central Bank Backed Digital Currency Retail is transferred to consumer wallets.
For most cash transactions above Rs 50,000, customers are required to provide their permanent account number. Although there is no official limit on the value of digital rupee transactions, it is generally believed that any retail transaction under Rs 50,000 will not be recorded. Deals worth more than Rs 2 lakh must be declared for tax purposes.
Smartphone-free transactions
Experts anticipate that the ability of the e-rupee to be used for offline transactions on feature phones will facilitate the currency’s widespread use in remote and rural areas. This is the most effective method because the recipient would receive the electronic rupee coupon via short message service (SMS) or quick response (QR) code. Because of this, it can be used even in places with poor or no internet service. Also, if it’s an SMS, anyone can use it, even if they don’t have a smartphone.
There is no requirement for a financial balance
In spite of the fact that specialists noticed that a financial balance and a check card are expected for UPI exchanges, an e-Rupi wallet might be utilized with next to no of these things, making it a more helpful installment choice.
“Customers should be able to trade with a retail CBDC without having to deal with a bank, just like they would with real money. This is a digital transfer that goes directly from one person to another without having to deal with a bank. Vishwas Patel, executive director of Infibeam Avenues Ltd., claims that the denominations of CCAvenue would be identical to those of actual currency.
All one handle
The UPI ID or handle varies between services and institutions. While the e-Rupi ID will remain the same, the UPI ID that is generated when attaching the same bank account to two distinct platforms may differ. According to Kunal Chowdhry, CEO of Apollo Singapore Investments, “the digital rupee will be operated by the RBI rather than by bank intermediaries in the case of UPI where each bank has a different UPI handler. “Only one public key (address) will be required for each e-rupi transaction.
Physical currency backup is not required
Physical cash is utilized to help UPI transactions. The transaction will be unsuccessful if there is insufficient funds in the user’s bank account. In contrast, instead of traditional cash or currency, the e-rupee can be used to make digital payments. In India, the digital rupee issued by the RBI is legal tender. Physical currency is not required to support it.
