India has launched a mobile payment platform designed to efficiently deliver government benefits and limit the misuse of funds dispensed through the country’s social welfare system.
The e-RUPI digital payment system is accessible to anyone with a mobile phone, even without a bank account. The e-RUPI comes in the form of QR codes or SMS messages sent to the phones of designated recipients as e-vouchers.
The e-payment system covers public welfare services a beneficiary is already receiving, as well as one-time vouchers unique to a recipient. A person visiting a hospital, for example, can receive services after presenting the digital voucher.
“E-RUPI signifies how 21st century India is moving ahead with the help of modern technology and connecting technology with people’s lives,” prime minister Narendra Modi said Monday, marking the launch of the payment system.
India used to struggle to gain the full picture of the impoverished who would receive public services. In 2014, the government drew up the “Digital India” initiative that digitalizes official paperwork. Bank accounts have been linked to mobile numbers and national IDs with biometrics information, which streamlined direct payments of relief money.
The number of bank accounts grew through public financial institutions. The ratio of people holding bank accounts reportedly rose to about 80%. But payments to bank accounts still carried the risk of spending that was not intended by the government.
“Welfare money deposited in a bank account could be used for gambling, for example, which does not fulfill the original purpose,” said Kaori Iwasaki, senior economist at the Japan Research Institute. “E-RUPI can raise the effectiveness of social insurance and other payments.”
E-RUPI was developed by National Payments Corporation of India in collaboration with the country’s financial authorities and the Ministry of Health and Family Welfare.
The payment system will first be applied to the welfare and health care sectors. The government plans to gradually expand e-RUPI to other areas such as service and benefits programs at businesses.
India keeps telecommunication fees low by international standards, and there is widespread ownership of mobile devices. The rate of smartphone ownership stood at 64% last year, according to Hong Kong analytics company Counterpoint, up from 44% in 2016.
Cashless payments started gaining traction in India when the country abolished high-denomination bank notes in 2016, then took off further amid the pandemic. The Indian government aims to accelerate the digitalization of society with e-RUPI.