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Digital Rupee Will Be A Better Than UPI Payment System; Find How?

Digital Rupee will be issued by Reserve Bank of India from next financial year and it will bring new promises to India’s digital payment systems. In Budget Speech Union Finance Minister Nirmala Sitharaman announced that Central Bank Digital Currency (CBDC) will be more efficient than existing systems and will make for a cheaper currency management system.

How Digital Rupee Will Change An Established UPI System?

Digital rupee will be phenomenal in settlement of securities and payments for financial institutions. The UPI System has a failure rate of 1.2-1.3% which is a huge number if you will look at the volume of transaction that happen everyday through various UPI apps. It will also lower the commission cost that is higher in UPI Channels. Vinshu Gupta, Founder of Nonce Blockchain Studio said that transaction numbers of UPI have started declining because of failure rates and CBDC will resolve the issue in future. Digital rupee transactions can be done via UPI Channels which will reduce settlement risks and improve efficiency.

Sumit Gwalani, Co-Founder of Neobank Fi told Mint that, “UPI payments have a success rate of roughly 98.6%. On a scale of billions of transactions per month, there’s a significant gap that still needs to be filled. Digital rupee transactions via UPI can improve efficiency by reducing settlement risks and the incidence of such transaction failures. A number of central banks across countries are either contemplating or experimenting with central bank digital currencies (CBDCs).”

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Digital Rupee

Another prospect that digital rupee will bring is cross border transactions where CBDC could be integrated with global system and save cost that comes in cross-border transactions. It will also open several other avenues for Fintech companies in India.

Mihir Gandhi of PwC said, “Available digital payment modes have been able to meet various payment facets in the country. The digital rupee can make a significant impact in a few notable areas like offline payments, programmable/targeted payments (subsidies), cross border payments & remittances.”

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Siddhant Baranwal

Siddhant is a Content Creator. He has been doing this for past three years and have managed to gain good attention of audiences for his work. He is an active reader and has huge respect for art and theatre.

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