Report: Payment Firms Expected to Begin Offering Digital Rupee Transactions

The Reserve Bank of India’s (RBI’s) offer to allow payment firms to enable eRupee transactions via their platforms has reportedly been taken up by five such firms.

Google Pay, Walmart-backed PhonePe, Amazon Pay, Cred and Mobikwik have applied to join the Indian central bank’s digital currency pilot, Reuters reported Monday (Aug. 5), citing unnamed sources.

The companies declined to comment, according to the report.

When the RBI launched the eRupee pilot program in December 2022, it permitted only banks to offer the digital currency through their mobile applications, the report said.

It then expanded the program in April to include payment firms, once they are approved by the RBI, per the report.

The five firms that have applied to participate in the pilot are expected to begin offering access to the eRupee within three or four months, according to the report.

Allowing them to do so should widen the user base and increase the volume of eRupee transactions, because these five firms collectively account for 85% of the digital payments made via India’s Unified Payments Interface (UPI), the report said.

The number of transactions using the eRupee has declined sharply since late last year, falling from 1 million a day to between 100,000 and 200,000 a day, per the report.

It was reported in December 2022, when the pilot program was launched, that seven Indian bankers were unimpressed with the digital rupee, saying it demonstrated little benefit.

The bankers said that the digital currency was very similar to the internet-based banking users were already using, that it required each trade using it to be settled individually rather than being handled in bulk, and that banks were unlikely to continue using it once the pilot concluded, Reuters reported at the time.

In February 2023, it was reported that Indian banks and retailers began accepting contactless payments made with digital rupees as part of the pilot program. The first merchant to do so, Reliance Retail, allowed test groups of customers to make QR code payments with the digital rupee at its Freshpik gourmet food stores.

In May, the RBI said that it aimed to make its digital currency function offline.

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