In a significant move towards boosting digital transactions, leading payment platforms Google Pay, Walmart-backed PhonePe, and Amazon Pay are among five companies seeking to join the Reserve Bank of India’s (RBI) digital currency trial. Indian fintech firms Cred and Mobikwik are also aiming to participate in the pilot, sources have revealed.
This strategic collaboration involves the RBI and the National Payments Corporation of India (NPCI), the nation’s payments authority. These firms are expected to introduce e-rupee access within the next three to four months.
The e-rupee, despite peaking at over 1 million daily transactions late last year, has seen a significant decline to approximately 100,000-200,000 transactions per day. By involving established payment firms, the user base for e-rupee transactions is anticipated to expand, potentially reviving transaction volumes. Together, these five firms account for over 85% of digital payments through the Unified Payments Interface (UPI), which handles around 13 billion transactions monthly.
While the central bank continues to promote the e-rupee, a full-scale launch of the digital currency is not expected in the immediate future. The e-rupee is likely to remain in the pilot phase for the next couple of years.
E-Rupee failed to attract people after launch
The RBI launched the e-rupee pilot in December 2022 as a digital counterpart to physical currency. Although initially popular, e-rupee transactions have since declined, highlighting the challenges central banks face in promoting digital currencies. Initially, only banks could offer e-rupee via their mobile apps, but in April, the RBI allowed payment firms to provide e-rupee transactions on their platforms once approved.
What Is the E-Rupee?
India’s digital rupee, also known as eRs or eINR, is a central bank digital currency (CBDC) issued by the RBI. It represents a digital version of the Indian rupee, operating on blockchain or distributed ledger technology. The digital rupee aims to enhance financial inclusion, facilitate efficient digital transactions, and support India’s technological progress. Unlike cryptocurrencies, the digital rupee is fully integrated into the RBI’s monetary policy and payment infrastructure.
