E-Rupi: A New Digital Payment Solution for Commercial Transaction

Author:- Shivam Pandey, Research Assistant, All India Legal Forum


Since the COVID-19 outbreak, our country has seen a massive change in day-to-day life transactions and introduced cashless transactions to many of the citizens of our country which was initiated by our Prime Minister Shri Narendra Modi. The UPI, Digital Banking, and different types of cards helped the entire nation to shift their mode of payment to cashless transactions. But all these types of transaction needs good internet connectivity and a smartphone and in the rural or sub-urban area many people couldn’t afford smartphones, so for them on August 2021 Indian Prime Minister Shri Narendra Modi introduced via video conference a new form of Transaction E-RUPI. The E-RUPI is a contact and cashless transaction in which an individual will be provided a QR Code or an SMS, and would use those for his/her transaction. The agencies or company would ask their respective bank and would provide the details of the individual for whom the voucher will be issued. The bank collaborating with NPCI would issue the voucher and send the user in the form of a QR Code or SMS. The E-RUPI is developed by the National Payment Corporation of India (NPCI which oversees the digital payments ecosystem in India) with the Department of Financial Services Ministry of Health and family welfare and the national health authority.

How E-RUPI Works?

 The QR Code and SMS would also be issued by NPCI via a specified bank for a specific person for his/her defined purpose of the e-voucher (only for the purpose it would be issued) and redeemed only one time. The NPCI would issue three QR codes, the one would be for the individual, another one for the organization or merchant where he/she will use the voucher, and the last one for themselves if there would be any problem or case related to the transaction.  This payment voucher can be accessed without using any UPI application, digital bank, or card. This will ensure timely payment without the involvement of other intermediaries.  Currently, only 11 banks are issuing which are authorized by the Reserve Bank of India (RBI) this voucher axis bank, Canara bank, Punjab National Bank, State Bank of India, HDFC bank, Bank of Baroda, IndusInd Bank, Indian Bank, Kotak Mahindra, ICICI Bank, Union Bank of India and 1600 hospitals started using this new feature till date. It’s a kind of pre-paid voucher that can be used where it is acceptable. The maximum amount of transaction set for the government scheme is 1,00,000 and for private transactions 10,000 for each voucher. The validity of the voucher is can be defined by the issuer bank as per the use (max 1 Year).

The legal entity of E-RUPI

The E-RUPI is a person-to-merchant transaction purpose.

Acts that regulate the E-RUPI are: –

  1. Banking Regulations Act. 1949
  2. Payment and Settlement Systems Act, 2007 (PSS Act)
  3. Section 43A of the IT Act, 2000, and the IT Rules, 2011
  4. Section 25 of the Payment and Settlement Systems Act, 2007 (PSS Act)

Advantages Of E-RUPI

One of the best advantages of E-RUPI is it did not require bank account details or an ID card and therefore there would be no sharing of personal data, the data of the beneficiary would be kept confidential during and after the transaction. The merchant can assure real-time payment as the E-RUPI voucher is pre-paid and as it assures simple, easy to use secure, contactless transactions.

It can also be used on a device that is not connected to the internet through SMS. According to data only 32 (in 2020) percent of Indians have access to digital banks on their smartphones, so for them, the E-RUPI would be beneficial to those who don’t have internet access or cannot afford a smartphone, as the coupon can be used by an SMS too. And thus, it can also be used and can be adopted in villages and rural areas. The voucher which is issued can be tracked by the user. E-RUPI will reduce Fraud by people who use the money in some other unethical way rather than for what purpose they received the voucher by any governmental or private entities. It would be beneficial for the government to provide sponsorship and services to the citizens. Such beneficiaries are scholarships for students, medical facilities, to give fertilizers or other farming tools for farmers, payment of utility bills, and much more such benefits.

Disadvantages of E-RUPI

This payment voucher is started for targeted economically backward-class people with no smartphone devices type feature with them but they have to wait more as it can be only issued by 11 banks, regional banks have to wait for this feature to adapt successfully. Some people may use this voucher to convert the given amount in the voucher to cash for other use by giving some bribes to the merchant. The E-RUPI also have server problem which can be a challenge to the individual if he/she couldn’t able to redeem the voucher on time as it has a given time period for its use.


This e-voucher is completely different from UPI as it can be used in selective merchants. The e-RUPI voucher is going to play a huge role in making Direct Benefit Transfer (DBT) more effective in digital transactions in the country and will give a new dimension to digital governance. E-RUPI is cannot be used as a day to day life commercial transaction like we use UPI, it is just a, method of the government to make our country a cashless economy. The focus of the government for creating and introducing this feature is mainly on the rural area people as they are the only ones who can’t afford smartphones and due to this, they can’t use UPI. This is a good move by the government of India for ending the corruption in the high-value transaction, but for small transactions at the employee level, it won’t do much. The NPCI must have a strong and good check on the cybersecurity framework of the E-RUPI.


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