Major payment firms, including PhonePe, GooglePay, and AmazonPay, are gearing up to join the Reserve Bank of India’s (RBI) digital currency pilot program, according to sources involved in the discussions. Indian fintech companies Cred and Mobikwik have also applied to participate in the pilot, which aims to integrate the e-rupee into mainstream transactions.
The e-rupee, a digital form of legal tender issued by the RBI, was introduced as a digital alternative to physical currency. Despite an initial surge in transactions, its usage has recently seen a decline, mirroring the global challenges faced by central banks in promoting digital currencies.
The e-rupee maintains a conversion rate of 1 e-rupee to 1 Rupee and is recognized as a legal medium of payment and a secure store of value. Similar to cash, it can be used for transactions where possession allows for its use in place of physical currency. Users can store e-rupee in their bank’s e-rupee app, facilitating entirely paperless transactions. Transactions can be conducted anonymously using the sender/receiver’s phone number or QR code, or through account-based methods.
Initially, only banks were permitted to offer e-rupee through their mobile applications. However, in April, the RBI announced that approved payment firms could also facilitate e-rupee transactions via their platforms. These payment firms, which handle over 85 percent of digital payments via the Unified Payments Interface (UPI) and average about 13 billion transactions monthly, are now expected to roll out access to the e-rupee over the next three to four months in collaboration with the RBI and the National Payments Corporation of India (NPCI).
Despite ongoing efforts to popularize the e-rupee, the central bank has no immediate plans for a full-scale launch. The digital currency is anticipated to remain in the pilot stage for the next couple of years, as the RBI continues to evaluate and refine its implementation.
