E-RUPI Digital Payment Solution

Before understanding the need for e-RUPI, it is essential to comprehend direct benefit transfers and their history.

To look after the lower-income segment of the population, the government introduced subsidies. As people struggle to access the bare necessities, it is important to subsidize the cost of these necessities.

By subsidizing the cost, people have to pay a reduced price for items like ration, and the government would reimburse the company whose products are being bought.

Every system comes with some challenges. In this case of the public distribution system, the government was finding it difficult to target the actual beneficiaries. This is because some people acted as middlemen who could help claim subsidies even if someone is ineligible.

Due to this, the government was losing millions every year without offering subsidies to lower-income segment groups.

Soon after, Aadhar and Jan Dhan accounts were introduced. This helped the government authenticate beneficiaries and directly transfer the subsidy to their bank account. All the bank accounts were linked to their Aadhar.

The working of this system was simple. People need to pay the total price to the retailer and then claim for the subsidy amount if eligible. The government would directly transfer the subsidy amount to the bank account.

Hence the name, Direct Benefit Transfer.

This new system also had specific challenges. In this country of 1.3 billion people, many don’t have a bank account, especially in villages. Even if they visit a nearby town to open a bank account, accessing funds is a significant challenge.

Banking infrastructure needs to be developed to reach people living in villages. Again, this requires massive investment from the side of the government.

One solution to this problem can be adopting a voucher-based system.

There are a lot of parents living in villages who find it difficult in financing their kids’ education. They have to either enrol their kids in a government school or work to earn daily wages.

Now, administrators in such government schools are only accountable to the government. As long as they have access to state funding, the government will answer them. They don’t care much about the children, which is why the majority of government schools lack even necessities.

Teacher absenteeism is a significant problem, and there is no responsibility. The only way to improve these conditions is to make these government schools accountable to the kids and the parents.

For this, there is a need for a voucher-based system. The government can extend a voucher to support your kid’s education through this system.

The schools will collect vouchers from students and redeem them to see money in their accounts. This will make them responsible. If a parent believes that their child is not getting a quality education, they will send them to a better government school, and the government school will lose money.

In this way, the government’s funds will be used to pay to institutions that are performing. This is a direct benefit transfer, just that the control is in the consumer’s hands.

Now, the challenge is reaching all those parents and authenticating beneficiaries.

For solving this challenge, e-RUPI comes into the picture.

As the government put it — “e-RUPI is a cashless and contactless instrument for digital payments. It acts as an e-voucher based on a QR code or SMS string, which is delivered to the mobile phones of the beneficiaries.”

The government can send an SMS to an Aadhar linked number and transfer the subsidy. Parents only need to redeem the e-voucher and use it to fund their kind’s education.

It can deliver various services and products and provide support under different welfare schemes like Mother and Child welfare schemes, TB eradication programs, Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertilizer subsidies, etc.

Hence, e-RUPI has significant scope and will benefit many use cases to solve different challenges.

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