What Is Digital E-Rupee and How Does It Work?

What is Digital E-Rupee?

The Digital E-Rupee, also known as e₹ or e-RUPI, is a digital version of cash issued by the Reserve Bank of India (RBI). It operates as legal tender, with one digital rupee equating to one physical rupee. The e-Rupee is designed to facilitate secure and efficient transactions in the digital economy, allowing users to conduct various financial activities through digital wallets or UPI without relying on physical currency.

This Central Bank Digital Currency (CBDC) aims to promote digital payments, reduce the costs associated with managing physical cash, and enhance financial inclusion, particularly in areas with limited banking infrastructure. The e-Rupee functions similarly to cash but offers the convenience of digital transactions, making it accessible for both personal and business use.

Key features of E-Rupee currency

Legal tender: Recognized as an official currency by the government.

Digital format: Available in electronic form, facilitating quick transactions.

One-to-one value: Each e-Rupee has the same value as a physical rupee.

User-friendly: Can be used via digital wallets and UPI platforms.

Secure transactions: Enhanced security features to protect user data.

Difference between UPI and Digital E-Rupee

Feature	Digital E-Rupee	UPI
Nature	Digital currency issued by RBI	Payment system facilitating bank transfers
Settlement process	Instantaneous transfer without intermediaries	Requires inter-bank settlement
Transaction fees	Generally free of transaction fees	May involve nominal charges from banks
User experience	Direct transfer akin to cash transactions	Involves multiple steps for payment
Accessibility	Available through designated wallets	Requires a bank account and UPI app

Advantages of Digital E-Rupee

Fast transactions: Enables instant payments without intermediaries.

Cost-effective: Reduces transaction fees associated with traditional banking.

Enhanced security: Minimizes risks of fraud and data breaches.

Financial inclusion: Accessible to unbanked populations, promoting participation in the digital economy.

Convenient usage: Allows for easy transactions using QR codes or SMS.

How to use E-Rupee with UPI

Using the Digital E-Rupee with UPI is straightforward. First, users need to register for an e-RUPI wallet through participating banks. Once registered, they can load money into their e-RUPI wallet from linked bank accounts.

To make a transaction, users simply scan a QR code at merchants that accept e-Rupee payments or input an SMS string if applicable. The transaction occurs instantly, transferring the e-Rupees directly from the user's wallet to the merchant's wallet without any intermediary. This process not only enhances convenience but also ensures that transactions are secure and efficient.

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