Starting December 1st, RBI has launched a digital currency or ERP for the common citizen. The technical word of course is central bank digital currency but let us call it ERP like the reserve bank does. RBI has chosen four banks, State Bank of India, ICSA Bank, Yes Bank and IDFC Bank for the pilot, the experiment. These banks have chosen some individuals and some merchants who are account holders with these banks for this pilot project. They have sent emails and SMS’s to these account holders to download the ERP app from Google Store.
After downloading the the customers have to click and go through a verification of their sim process and open an E wallet on their phone. Then they have to connect this e-Wallet to their own savings account again via the app. In the next step they can transfer from their savings account into this e-wallet. They come as E tokens. Now they are ready to transfer money to other persons who also have been selected by the banks for the pilot and who therefore have downloaded their wallets.
The selected merchants can be paid by a QR code. For now all these transactions will only be within a CUG or a closed user group. This E rupee is like cash that is you know our normal coins and notes and they will be issued in the same denominations five, ten, 20. Like cash it won’t earn interest and it cannot be used as a debit card or a credit card. Right now the selected banks will provide the e-wallet service only in Delhi, Mumbai, Bengaluru and Bhubaneshwar in the next step four more banks that is HDFC Bank, Kodak Bank, DOB, and Union Bank are also going to join the CUG and then these banks can extend the app to nine more cities Ahmedabad, Gang Talk, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.
This pilot is meant to test the robustness of the entire process and based on the learnings other banks will also be allowed to offer the wallet to more customer.
It’s too early to tell if the E rupee will become very popular considering that it is so easy to pay over UPI using Google Pay or phone pay then why would one take the trouble to create an E wallet and pay through that wallet but the E rupee is going to have one important advantage or differentiation over UPI UPI is a bank to bank transfer so the bank who you are paying, what and how much.
UPI leaves an audit trail. But E rupees is like the cash in your wallet. So even the bank won’t know who has paid ah whom ah through this wallet. The transactions will not leave an audit trail. But then it is only for very small amounts. The popularity will depend on the quality of the technology and the customer interface.
