In simple words, the e-Rupee (e₹) is the digital form of the Indian rupee notes stored in a digital wallet. That’s why it’s commonly referred to as Digital Rupee. e-Rupee is developed on blockchain technology and controlled by the Indian authority and Reserve Bank of India. Its also called CBDC which stands for ‘Central Bank Digital Currency’.
If you have used any UPI app such as PhonePe or Paytm you must have seen that when you scan a QR code and pay a merchant or individual it just takes about 4-5 seconds for the transaction to be successful. But there are multiple intermediaries involved to make this transaction successful in a few seconds.
If it’s an individual receiver, first you request your bank via your UPI app to transfer your preferred amount to the receiver, then your bank deducts the amount from your account and transfers it to the receiver’s account and you get a ‘Transaction Successful’ message in your UPI app. In the end of the day the bank has to clear the settlement process. The settlement process is a little bit more time consuming when the receiver’s account is in a differnet bank. If it’s a merchant, then the merchant doesn’t get the amount in his account even after you get the ‘Transaction Succcessful’ message because most of the UPI payment provider settles the merchant’s daily transactions in a single transction in the end of the day.
The technology behind the e-Rupee is very simple. The e-Rupee is stored in your CBDC wallet app, there are no intermediaries at all. You could simply transfer your money from your wallet to another wallet be it an individual or a merchant just as if you were handing them physical cash. The transaction is final. The settlement is final and you may not even need an internet connection. It’s just like physical cash, but entirely in digital format.
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Pikai Mandal