Google Pay, Walmart-backed PhonePe, and Amazon Pay are among five payment businesses looking to participate in the Indian central bank's digital currency pilot by facilitating e-rupee transactions, according to Reuters. Cred and Mobikwik, both Indian fintech businesses, are also interested in participating in the experiment, according to the newspaper, citing sources.
These payment companies are working with the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI), the country's payments regulator, and are expected to launch e-rupee access over the next three to four months, the statement noted. Increasing the user base in the face of declining transactions According to one source, e-rupee transactions peaked at over 1 million per day late last year and have subsequently decreased dramatically to around 100,000-200,000 each day.
Furthermore, as per another source, allowing well-known payment businesses to support e-rupee transactions will widen the user base, potentially increasing transaction volumes. Collectively, these five payment businesses account for more than 85% of digital payments made via UPI, which processes around 13 billion transactions every month.
While the central bank continues to promote the e-rupee, there are no immediate plans to fully deploy the digital money, according to the article. The e-rupee is expected to continue in the trial phase for the next few years.
What is the RBI's digital currency?
The Reserve Bank of India launched the e-rupee pilot, a digital alternative to real money, in December 2022. Although e-rupee transactions increased initially, they have since fallen, highlighting the difficulty that central banks throughout the world confront in supporting digital currencies.
Initially, only banks were permitted to provide e-rupee via their mobile applications; but, in April, the central bank declared that payment businesses may also conduct e-rupee transactions on their platforms if approved by the RBI. Google Pay and Amazon Pay, provided by Alphabet Inc.'s Google and Amazon.com, respectively, facilitate retail payments via India's extensively utilized Unified Payments Interface (UPI).
India's digital rupee (eRs or eINR) is a Central Bank Digital Currency (CBDC) produced by the Reserve Bank of India (RBI). It is a tokenized digital version of the Indian rupee based on blockchain or distributed ledger technology. The digital rupee is intended to improve financial inclusion, promote efficient digital transactions, and correspond with India's technical advancements. Unlike cryptocurrencies such as Bitcoin, the digital rupee is completely integrated into the RBI's monetary policy and payment systems.
CBDC's Key Features
The digital rupee is legal currency, recognized by individuals, companies, and governments. It is issued in compliance with the RBI's financial rules and may be exchanged for actual currency at commercial banks.
Transactions utilizing the digital rupee are performed more swiftly and securely than traditional banking methods. Furthermore, the digital rupee has the ability to include programmable features like smart contracts. The RBI has launched the digital rupee for wholesale (eRs-W) interbank settlements and retail (eRs-R) consumer and business transactions. As of February 2023, the digital rupee has 50,000 users and 5,000 merchants.
According to the official announcement, the digital rupee's introduction seeks to minimize the security printing expenses connected with physical money, which totaled around Rs 5,000 crore for the public, companies, banks, and the Reserve Bank of India.
