4 Key Differences Between e-Rupee and UPI

In the era of digital advancements, India has witnessed a rapid transformation in its payment landscape. With the introduction of e-Rupee or Digital Rupee by the Reserve Bank of India (RBI) and the Unified Payments Interface (UPI) developed by the National Payments Corporation of India (NPCI), the country has taken significant strides towards a cashless economy. In this article, we will explore the differences between these two prominent digital payment systems, e-Rupee and UPI.

4 Key Differences Between e-Rupee and UPI

1. Origin and Purpose:

e-Rupee was developed by the RBI with the aim of providing a digital form of currency. It serves as a sovereign digital currency issued by the central bank. On the other hand, UPI was created by the NPCI as a platform to facilitate digital payments for millions of Indians. It acts as an interoperable payment system that allows seamless transactions between different banks and financial institutions.

2. Anonymity vs. Traceability:

One of the key distinctions between e-Rupee and UPI lies in the level of anonymity and traceability offered. Payments made and accepted using e-Rupee are anonymous, similar to cash transactions. This provides users with a certain degree of privacy. In contrast, UPI payments are made using a unique handle, allowing transactions to be traced by individuals as well as authorities. This transparency helps in ensuring accountability and combating fraudulent activities.

3. Bank Account Requirement:

Another significant difference between e-Rupee and UPI is the necessity of a bank account. To use e-Rupee for payments, individuals do not need to have a bank account. This feature opens up opportunities for financial inclusion, enabling those without traditional banking access to participate in the digital economy. Conversely, at least one bank account is mandatory to make and accept digital payments using UPI. This requirement ensures that funds are securely transferred between bank accounts.

4. Accounting and Deductions:

When utilizing e-Rupee, payments are deducted or added to the total amount of digital currency an individual possesses. This system allows for easy tracking of e-Rupee transactions and provides a straightforward approach to manage one's digital currency balance. On the other hand, UPI transactions directly debit or credit an individual's or merchant's bank account. This integration with bank accounts ensures immediate funds transfer, providing a real-time reflection of financial transactions.

The End Notes

Both e-Rupee and UPI have revolutionized the digital payment landscape in India, albeit with different functionalities and objectives. While e-Rupee serves as a digital currency issued by the RBI, UPI acts as a platform enabling secure and convenient digital payments. The anonymous nature of e-Rupee payments offers privacy, whereas UPI ensures traceability for transparency and security. The absence of a bank account requirement in e-Rupee promotes financial inclusion, while UPI's integration with bank accounts facilitates seamless fund transfers.

As India progresses towards a digital economy, the coexistence of e-Rupee and UPI caters to the diverse needs of the population. With ongoing advancements and evolving user preferences, these digital payment systems will continue to shape the future of financial transactions in India.