e-RUPI— A Guide to India’s Digital Cash Voucher System

Backspace Tech
5 min readJan 19, 2024

We all know for a fact that digital payment methods require a smartphone, an app, or an internet connection.

But, do you know that there is a way of digital payment that can be done even with a feature phone?

It is e-RUPI!

Intrigued?

We’re about to explore the exciting potential of India’s revolutionary digital currency, the e-RUPI!

What is e-RUPI?

e-RUPI is a digital voucher delivered via SMS or QR code, functioning as a pre-paid instrument for seamless one-time / multiple-time payments. Beneficiaries can redeem it without a card, digital payment app, or internet banking, at accepting merchants. This wholly cashless payment method is accessible on various mobile devices, and operates like a coupon for specific services, requiring no extra verification. Thus e-RUPI streamlines secure, inclusive, and uncomplicated digital transactions.

In simple words, it is a coupon delivered to your phone, usable only for specific needs!

Who Ignited this Spark?

It wasn’t just one mastermind behind e-RUPI!

It was a teamwork!

This revolutionary voucher was launched in August 2021, which was a joint effort led by the

  • National Payments Corporation of India (NPCI)
  • Department of Financial Services (DFS)
  • Ministry of Health & Family Welfare (MoHFW)
  • National Health Authority (NHA) and
  • Partner Banks

The e-RUPI Orchestra: Who Does What?

  1. National Payments Corporation of India (NPCI): Serves as the main technical backbone, handling the e-RUPI platform, transaction processing, and settlement.
  2. Department of Financial Services (DFS): Leads the conceptualization and policy framework for e-RUPI, overseeing its strategic direction and impact.
  3. Ministry of Health & Family Welfare (MoHFW): Played a key role in the initial e-RUPI adoption for COVID-19 vaccination payments and continues to be involved in healthcare-related use cases.
  4. National Health Authority (NHA): Provides technical and operational support for healthcare-related e-RUPI transactions.
  5. Partner Banks: Issue and redeem e-RUPI vouchers based on instructions from designated entities like government departments, corporates, and NGOs.

Speaking of Partner Banks, a robust network of 20 issuing banks is presently responsible for creating and distributing e-RUPI vouchers. Additionally, 11 acquiring banks stand tall, facilitating convenient redemption at a growing number of merchants. Out of the 20 issuing banks and 11 are acquiring banks, and 9 are both issuers and acquirers.

Furthermore, a total of 1959 hospitals are currently operational with e-Rupi.

So far, we’ve explored what e-RUPI is, its launch date, and the team behind its introduction. Now, let’s explore the purpose that drove its introduction!

Why the Introduction of e-RUPI?

One of the most significant motivations behind e-RUPI’s introduction is its ability to revolutionize Direct Benefit Transfers (DBT). It was introduced with several motives, addressing various challenges and opportunities in India’s financial landscape:

1. Enhance Transparency and Leakproof Delivery:

  • Traditional cash transfer programs often suffer from leakages and corruption, with funds sometimes diverted from intended recipients. e-RUPI, being a digital voucher restricted to specific purposes, ensures transparent and targeted delivery of benefits directly to individuals, eliminating the risk of diversion.

2. Promote Financial Inclusion:

  • Many people in India are still unbanked/underbanked, limiting their participation in the digital economy. e-RUPI works even on basic phones and without needing bank accounts, making it accessible to a wider population and promoting financial inclusion.

3. Streamline Cashless Transactions:

  • e-RUPI fosters a cashless ecosystem, reducing reliance on physical cash and its associated risks like theft or loss. This simplifies transactions, enhances security, and reduces administrative costs for both beneficiaries and service providers.

4. Improve Targeted Benefit Delivery:

  • Compared to generic cash transfers, e-RUPI vouchers can be restricted to specific purposes like healthcare or education, ensuring funds reach their intended use and maximize their impact. This helps government programs deliver targeted benefits more effectively.

5. Empower Beneficiaries:

  • e-RUPI gives beneficiaries more control over their funds as they can choose where and how to use the vouchers within the designated category. This promotes transparency and empowers individuals to make informed decisions about their expenses.

6. Reduce Administrative Burden:

  • e-RUPI simplifies the distribution and redemption process for both government agencies and service providers. The digital platform requires minimal paperwork and automates many tasks, reducing administrative burdens and allowing resources to be used more efficiently.

7. Foster Innovation in Digital Payments:

  • e-RUPI’s unique features pave the way for further innovation in India’s digital payments landscape. Its targeted voucher system could be adapted to various sectors, and its offline functionality could provide access to digital payments for underserved communities.

e-RUPI in Action

Let us know how e-RUPI works in daily life through a farmer’s subsidy journey!

Imagine a farmer named Ravi in rural India who has only a basic phone with him, and is entitled to a government subsidy on fertilizers. Here’s how e-RUPI simplifies his experience:

  • Notification: Ravi receives an SMS on his basic phone informing him about his fertilizer subsidy credited as an e-RUPI voucher. The message specifies the amount, designated fertilizer retailers, and validity period.
  • Redemption: Ravi visits the local co-operative that accepts e-RUPI. He doesn’t need a bank account or smartphone. Instead, he shares an SMS string with the shopkeeper.
  • Verification: The shopkeeper scans the SMS string printed on the e-RUPI voucher using a basic Android phone provided by the government. Verification happens instantly, confirming the authenticity and validity of the voucher.
  • Transaction: The e-RUPI system automatically deducts the exact amount of the fertilizer purchase from Ravi’s voucher and transfers it to the shopkeeper’s account. There’s no need for cash handling or complex paperwork.
  • Transparency: Both Ravi and the shopkeeper receive an instant SMS confirming the successful transaction. Ravi can review his remaining e-RUPI balance through the same notification system.

Use Case

Merchants in the specified industry can support individual e-RUPI sponsorships.

  • Electronics
  • Entertainment
  • Fuel
  • Grocery
  • Meal
  • Medical
  • Movies
  • Shopping
  • Travel

Exception: Gold, Insurance, Loan, EMI, Investment, and Capital market

Conclusion:

In conclusion, e-RUPI was introduced to address multiple challenges and capitalize on opportunities in India’s financial system. While e-RUPI shines with its secure and targeted approach, its journey toward true impact is just beginning. Bridging the digital divide through accessibility features and robust awareness campaigns is key to reaching a wider audience. By actively advocating for its improvement and wider adoption, we can ensure e-RUPI reaches its full potential, not just as a payment tool, but as a catalyst for a more equitable and transparent India.

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P.S: What topic do you think we should explore next? Let us know in the comments.

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Backspace Tech

Backspace Tech offers Fintech-as-a-Service to automate,simplify, and disrupt the payment industry by handling chargeback requests through a plug-and-play model.