The demonetization of Rs. 500 and Rs. 1000 currency notes were followed by discourses or rather heated political debates on the Prime Minister’s vision of ‘Digital India’. One of them being digital payments. There was a lot of debates over the Unified Payments Interface, popularly and in a short form known as UPI. Most of the critics as I remember were on the usage of it. The critics strongly argued on who’ll forget fiat currencies and go for the digital payment system which involves linking the bank accounts to the UPI platform. Another strong critic was that of data protection. For this, the Reserve Bank of India set up a non-profit organization named the National Payments Corporation of India (way back in 2009). Basically, it acts as a bridge between the banks and the Payment Service Providers (Google Pay, BHIM, PhonePe, Paytm, etc. fall under this category). In other words, it is quite similar to the role played by card networks like VISA or MasterCard for card payments. It is the job and duty of the NPCI to ensure that a smooth transaction takes place.
Although the critics of UPI were sharp, the statistical data is quite opposite of the heated critics. “UPI is perhaps the fastest product to hit 2 billion transactions a month in 2020 since its inception in August 2016.”
The Reserve Bank of India in its Annual Report for 2019-20 said that UPI has grown in volume terms to eclipse all other payment modes. By July 2020, UPI had processed 149.7 crore transactions amounting to Rs. 2.9 lakh crore. In July 2021 alone, UPI platforms processed 3.24 billion transactions amounting to Rs. 6.06 trillion which is a 10.76% increase from June 2021.
Moving a step closure to ‘Digital India’, the Prime Minister launched a digital payment system called “e-RUPI” on Monday i.e. 02/08/2021. E-RUPI is a cashless and contactless instrument for digital payment. It has been developed by the National Payments Corporation of India on its UPI platforms in collaboration with the Department of Finacial Services, Ministry of Health & Family Welfare and the National Health Authority. The reason why the health departments are involved here is that since it’s the beginning, e-RUPI is available for health services as of now and will be expanded to other segments. To quote the Prime Minister, “e-RUPI voucher is going to play a huge role in making digital transactions, and DBT more effective which would help everyone in targeted, transparent and leakage-free delivery. Not only the government, if any organization wants to help someone in their treatment or education or for any other work, then they will be able to do so through e-RUPI instead of cash”
Over the years, several programs have been launched to ensure that the benefits reach their intended beneficiary in a targeted and leak-proof manner with limited touchpoints between the government and the beneficiary. The concept of electronic vouchers takes forward this vision of good governance.
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