PhonePe, GooglePay and AmazonPay are among five payment firms seeking to join the Indian central bank's digital currency pilot by offering transactions via the e-rupee, according to sources directly involved in the discussions. Indian fintech firms Cred and Mobikwik have also applied to join the pilot.
The e-rupee, a digital alternative to physical currency, has seen a decline in transactions after an initial surge, reflecting the challenges faced by central banks globally in promoting digital currencies.
What is RBI E-rupee or Central Bank Digital Currency?
E-rupee issued by the Reserve Bank of India is a digital form of legal tender with a conversion rate of 1 e-rupee to 1 Rupee. It is accepted as a medium of payment, legal tender, and a secure store of value. Similar to bank notes and coins, e-rupee can be used for transactions where possession allows for its use in lieu of cash.
You can store e-rupee in your bank’s e-rupee app, with the digital wallet operating in the same manner as a physical cash wallet, but with entirely paperless transactions. E-rupee transactions can be conducted anonymously by obtaining the sender/receiver’s phone number or QR code, or through account-based transactions.
Initially, only banks were permitted to offer e-rupee via their mobile applications, but in April, the central bank announced that payment firms could also offer e-rupee transactions via their platform once approved by the RBI.
Payment firms are working closely with the RBI and National Payments Corporation of India (NPCI) and are expected to roll out access to e-rupee over the next three to four months. These payment firms account for over 85 percent of digital payments via UPI, which averages about 13 billion transactions each month.
Despite efforts to popularise the e-rupee, the central bank currently has no immediate plans for a full-scale launch of the digital currency. It is likely to stay in the pilot stage for the next couple of years.
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Inputs from Reuters
