The Reserve Bank of India is getting ready to start Digital Rupee using its central bank digital currency (CBDC). Which will be exchanged with current currencies, accepted for payments, and regarded as a secure store of value.
It is a new way to utilize money that isn’t much different from the banknotes that are now in circulation.
Understand the Concept of Digital Rupee
Many countries’ financial systems already rely on digital currency. CoinmarketCap says that there are more than 21000 cryptocurrencies available. Yet, digital currency can only be exchanged virtually and never leaves a digital network.
There are mainly three types of digital currency for you: Cryptocurrencies, Central Bank Digital Currencies (CBDCs), and stablecoins. Blockchain technology, the most common type of distributed ledger by digital currencies.
After knowing about the digital rupee, let’s talk about why it is needed in India. As you must know the reason behind the launch of digital rupee by the RBI.
What’s the Use of the Digital Rupee?
The main argument for the establishment of the digital rupee is the RBI’s decision to help India advance in the race for virtual currencies. Of course, the importance of cryptocurrencies is growing.
- The digital rupee will become more efficient and transparent.
- Lower cost per transaction.
- Blockchain will make ledger upkeep and real-time tracking possible.
- Account settlements in real time.
- Both wholesale and retail clients will have constant access to the payment system.
- Indian customers are able to pay directly.
Now, you must be wondering if digital rupee offers you this much more than what UPI offers. Is it the same as digital rupee or not? If not then what is the difference between them?
Don’t worry, we are here to answer your queries.
So, let’s start!
How Does the Digital Rupee Differ from UPI?
UPI was created by NPIC (National Payment Corporation of India). Millions of Indians can make digital payments thanks to the UPI platform. Since UPI payments are made via handles, both individuals and government agencies may track every UPI transaction.
To make and accept digital payments using UPI, at least one bank account is required. When one conducts a UPI transaction, their bank account, whether personal or business, is debited or credited.
Whereas Digital Rupee is created by RBI. Like cash, e-Rupee payments are made and accepted in an anonymous manner. To utilize Digital Rupee for payments, a bank account is not required. Payments made with Digital Rupee are added to or subtracted from the total amount purchased.
Now I am sure that you get the idea of how these two payment methods differ from each other.
Let’s have a look on how to use this digital rupee.
How to Use Digital Rupee
- The closed user group (CUG), consisting of participating customers and retailers, covers specific regions for the experiment.
- The digital Rupee exists as a digital token that stands in for money.
- Customers will be able to conduct transactions with e-R using a mobile digital wallet provided by the partner banks.
- This would provide actual money, such as safety, settlement and trust.
How Will You Buy the Digital Rupee?
The RBI has ordered four banks State Bank of India, Yes Bank, ICICI Bank and IDFC First Bank to onboard a closed user group for the deployment of the e-Rupee during the rollout’s initial phase.
From these banks, both businesses and individuals can purchase it. A link to download the Digital Rupee app will be sent to you by your bank if you are one of the select few users or merchants.
The steps to register for CBDC are as follows:
- Verify your SIM card using the same mobile device that is linked to your bank’s account.
- Create an app PIN.
- Give your name, then select your wallet.
- You’ll build a wallet.
- Enter your debit card information to link your bank account number to the wallet you established.
The RBI has taken a very brave step that will get India closer to the cashless society that the country’s leaders have envisioned. In order to avoid losing out, merchants must keep a closer eye on the development and update their systems in accordance with new technical developments.
The RBI has not made it clear how businesses can obtain the QR codes needed to accept Digital Rupee. In order to prevent retailers from missing such a notification, we will keep an eye out.