How Does UPI Differ From Digital Rupee?

In the future, India will likely become totally digital. Unified Payments Interface (UPI) is already used far more frequently than cash in India. The country aspires to reach the next stage of digitization with the introduction of the central bank digital currency (CBDC) of the RBI, the digital rupee. How the digital Rupee is different from UPI is one of the concerns we haven't yet covered, despite having nearly all the answers to other queries about it.

• What is a "digital rupee," exactly?

Let's quickly recap what the digital rupee is all about first. A digital version of paper money is what the term "digital rupee" or "digital currency" refers to. Cash money and the digital rupee have the same value. One digital rupee is equivalent to one rupee in currency, for instance. Simply put, this indicates that, unlike cryptocurrencies, the value of the digital rupee never changes. Now let's talk about how the digital rupee differs from UPI.

• UPI vs. Digital Rupee

It is easy. UPI, in contrast to the digital rupee, merely serves as an interface for financial transactions involving actual money. While one cannot withdraw Digital Rupee from their bank account, it is merely another type of money similar to fiat money. However, users of the UPI interface can make online purchases using their bank accounts. Fiat money is essentially used for all transactions.

Because of this, UPI and the digital Rupee are two entirely distinct ideas. India may hope to someday stop using UPI by introducing the digital rupee. By relying on the digital rupees, the idea probably lowers the cost of administering and sending cash rupees. Therefore, the purpose of digital currency is to eventually replace the need for physical money. It?is still?necessary?to?do?more.

• Eligible banks and cities for the Digital Rupee pilot

The RBI has currently started a digital rupee trial in 4 cities and worked with 4 banks for the initial phase. The nation's central bank is anticipated to eventually make the service available to all citizens. The digital rupee was put to the test by the Indian central bank in Mumbai, New Delhi, Bengaluru, and Bhubaneswar starting on December 1. State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank were the four institutions that the RBI teamed up with for the initial testing.

The RBI announced that it will collaborate with four additional banks, including Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank, once testing gets underway. In the second phase, the service will be extended to several additional cities. Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla are some of these cities.

• How to purchase and utilize digital rupee

To buy a digital rupee, users must go to one of the four recognized banks' official apps or websites. The precise procedure for purchasing digital rupee hasn't been made explicit by the RBI, but it has stated that customers would be able to make purchases using QR codes The money will be taken from bank wallets and shown at merchant locations. Using Digital Rupee, one may shop and make purchases at local kirana stores. P2P and P2M transactions for the exchange of digital rupees are both possible (P2M). “E-Rupees?would?be?trusted,?safe,?and?final,?like?real?money. It will not accrue interest, just like cash, and can be changed into other kinds of payment including bank deposits, according to the RBI.

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