In August(1) , the Prime Minister, launched the e-RUPI. Simply put, e-RUPI is a digital prepaid, purpose and person specific payment utility system, which can be put to use one-time. This e-RUPI system does not rely upon any debit / credit card, internet connectivity, mobile application, any other external dependence for being utilized. The convenience of it is so, that is capable of being relayed to the beneficiary on a registered mobile number via SMS (for non-smartphone users), and through Quick Response (QR) code (for smartphone users). The manner in which this system is structured, allows for transmission of e-RUPI to offline recipients as well as the digital recipients with equal convenience. This contactless payment system is also ensuring that the details of the beneficiaries are completely confidential, and from how it is structured now, one could presume that the issuance of these vouchers will not be replete with issues concerning data management, privacy, and protection.

The Voucher

Only banks which are authorized by the Reserve Bank of India (RBI) to issue Prepaid Payment Instruments, and who are also participating as Payment Service Providers in the Unified Payments Interface (UPI) can issue e-RUPI. The voucher will contain a unique sequence, and/ or, QR code, which will carry information regarding the intended beneficiary and the amount that is to be transacted. Presently, e-RUPI has been rolled out for specific purposes only, but one can only assume that it can be scaled up for much complex transactions, gradually. For now, the maximum limit of each e-RUPI shall not exceed a total of INR 10,000, or, as defined by regulator(2) .

Who can use this?

The e-voucher system is aimed at the citizens of the country who may not necessarily have bank accounts and may not have access to the digital infrastructure which underlines the current hybrid financial systems available to the consumers. It is projected that 190 million Indians do not have bank accounts or participate in the formal financial sector, and numerousbank accounts remain inactive across the country(3). This cashless system will focus ondelivery of entitlement benefits to the last mile and may be integrated into other schemes assisting the private and the public sector, alike.

As of 2018, in India, over 26 persons per 100 persons own and operate smartphones which is a strikingly low figure(4). In order to make this mode of payment more accessible across the population without smartphones, the SMS feature has been included through which instead of a QR code, a unique voucher code will be transmitted over SMS to said users. This is an attempt to ensure that the persisting digital divide(5) does not render several intended recipients without any recourse.

Interestingly, the launch is with dedicated focus on the healthcare sector. Especially with the Covid-19 specific restrictions, the utilization of the e-RUPI at vaccination centers enables contactless payment and provides visibility over the redemption by the end user, who is originally intended to be the recipient of such benefits. For instance, where an employer wishes to have their employees vaccinated, it will be possible for them to issue such prepaid instruments and also have visibility over the point of redemption, once the service is complete. The process enables the issuer to be able to track the redemption of the voucher.

Regulation

e-RUPI is covered under the Payment and System Settlements Act, 2007 (the PSS Act). Under S. 2(i) of the PSS Act,e-RUPI can be classified as a payment system that enables payment to be effected between a payer and a beneficiary. The regulation of the payment system will be subject to the same level of scrutiny, monitoring and reporting that is expected of any payment system provider in the financial ecosystem, subject to the mandates of the RBI.

How to redeem the vouchers?

At the point of a transaction, a beneficiary and a service provider shall be involved, and will interact only via a digital interface, without having to demonstrate physical proofs or documentation. This leads to considerable reduction in costs, and also takes away the need to handling of cash or cards at the point of redemption. With a defined purpose, and the pre-blocked amount being enabled for a particular voucher, the chances for the card to be declined at the point of transaction is also limited, thereby making the process simpler for the service provider / merchant.

The stakeholders in the ecosystem are all benefitted by the entire process. For one, the benefactor does not have to invest money in physical transactions and is also able to gain information on voucher redemption, as per the updates of the issuer; and the beneficiary also does not have to share personal information for redemption, thereby maintaining privacy.

Since its introduction, there are now sixteen banks and acquirers(6) who are e-RUPI live partners, and there are more than 1900 identified live hospitals who have partnered with e-RUPI(7) in accepting the vouchers under this novel payment system.

Recently, Mswipe went live with e-RUPI offerings(8) , which enabled the merchants / service providers to accept prepaid e-RUPI payments from customers via the UPI voucher that is available on the Mswipe merchant application.

Way towards inclusion?

Presently, with the e-RUPI system being purpose specific, it is very well suited to be adopted into several welfare schemes of the governments, at the central level and the level of the states. This will void any leaks in the system, and unlike cash, will ensure that there is guarantee of cash transfer to and for the intended beneficiary. This could support the intentions of the welfare scheme in furthering transparency amongst the manner in which the government allocations/ spendings are made, increase the efficiency of the delivery of services which are sought to be made under a particular scheme. With necessary proliferation [with learnings from the healthcare sector], this could be moved into several welfare-oriented sectors like social schemes, education, and the likes.

With the gaining prominence of UPI,whereby even financial institutions around the world (9)are teaming up with the National Payments Corporation of India (NPCI) for the purposes of introduction of UPI into their payment system, there is a value which we also see in the e-RUPI payment system. This will invariably lead to financial inclusion and bring about the necessary changes which are expected of a robust financial system, and not built in too many dependencies. With tech savvy customers, who are also focusing on what comes out of their data [while wanting to preserve their privacy], e-RUPI might be a good way forward.
With UPI transactions gaining prominence, and with customers wanting to leverage mobile-based payment systems andfocus on better in-store experience/s, we are witnessing a growing reliance on new payment systems, and a departure from the conventional modes of payment, payment systems. Now that private parties like Mswipe enabling and accepting novel payment systems like e-RUPI, the merchants are also being empowered to adopt several kinds of digital acceptance methods, bringing about a smooth experience to the end users. Here’s to hoping that e-RUPI brings in the transparency, urgency, and smooth delivery of benefits and entitlements to the end users.

Bagmisikha Puhan, Associate Partner

Bagmisikha Puhan, Associate Partner, TMT Law Practice, is a technology lawyer and privacy practitioner. She is a member of the Bar Council of West Bengal. Her primary areas of focus include technology, telecommunications, and healthcare. She advises new age technology institutions in the healthcare, fintech and space communications sectors on general corporate advisory, statutory compliance, foreign direct investment, and also focuses on implementing privacy measures at an enterprise level. She has contributed to books and papers on telehealth, data privacy and protection, cybersecurity, and commercial space and policy. She is the legal advisor to the Telemedicine Society of India and has assisted the society in collaborating with the government/s for policy implementation. She is also a member of the Ethics Committee (Academic) of Mohan Foundation, which is a leading organization in the field of deceased organ donation and transplantation in the country.

1:- https://pib.gov.in/PressReleasePage.aspx?PRID=1743056, last accessed on September 05, 2021.
2:- https://www.npci.org.in/what-we-do/upi/faqs, last accessed on September 05, 2021.
3:- Gaurav R. Sinha, Lissette M. Piedra, UNBANKED IN INDIA: A QUALITATIVE ANALYSIS OF 24 YEARS OF FINANCIAL INCLUSION POLICIES, International Social Work, 10.1177/0020872819881184; See:Study examines INDIA’S policies for financial inclusion of the unbanked ILLINOIS, https://news.illinois.edu/view/6367/808477#:~:text=With%20about%20190%20million%20unbanked,sector%2C%20according%20to%20World%20Bank, last accessed on August 26, 2021, at 1940 hrs.
4:- Digital India: Technology to transform a connected nation (2019), McKinsey Global Institute https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/McKinsey%20Digital/Our%20Insights/Digital%20India%20Technology%20to%20transform%20a%20connected%20nation/MGI-Digital-India-Report-April-2019.pdf (P. 9 &12)
5:- https://www.apc.org/en/node/37367, last accessed on September 07, 2021, at 1030 hrs.
6:- https://www.npci.org.in/what-we-do/erupi/erupi-live-partners, last accessed on September 07, 2021 at 1146 hrs.
7:- https://www.npci.org.in/PDF/npci/e-rupi/PPV-Hospital-02nd-September2021.pdf, last accessed on September 07, 2021 at 1154 hrs.
8:- https://www.livemint.com/news/india/mswipe-goes-live-with-e-rupi-on-its-devices-11630496998821.html, last accessed on September 07, 2021 at 1155 hrs.

https://www.npci.org.in/PDF/npci/press-releases/2021/NIPL-Press-release-Mashreq-Bank-and-NPCI-International-join-hands-to-offer-acceptance-of-Unified-Payments-Interface-in-the-UAE.pdf, last accessed on September 07, 2021, at 1200 hrs.

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