Several banks including State Bank of India (SBI), HDFC Bank, Union Bank of India, Punjab National Bank (PNB), and Bank of Baroda (BoB) have recently introduced interoperability of Unified Payments Interface (UPI) with Digital Rupee. By integrating the UPI QR code infrastructure with the e-Rupee, this new functionality aims to simplify the payment process flow for thousands of users. Are you wondering how it will work and benefit you? Let’s find out.
What is UPI QR code-CBDC interoperability?
Touted as the e-Rupee or Digital Rupee, the RBI Central Bank Digital Currency (CBDC) is an electronic form of sovereign currency. The central bank proposed to issue two versions of the Digital Rupee — CBDC-Wholesale (CBDC-W) and CBDC-Retail (CBDC-R). CBDC-Wholesale is designed for restricted access to select financial institutions while CBDC-Retail can be used by all including the private sector, non-financial consumers, and businesses. Furthermore, the records of CBDC transactions are stored using blockchain technology. In plain terms, CBDC is nothing but a digital replica of the legal tender i.e., paper currency.
With the introduction of UPI QR code-CBDC interoperability, customers can now use their digital currency available in their Digital Rupee [CBDC-R] wallet and scan to pay across any UPI QR code, explained Joydeep Dutta Roy, Executive Director, Bank of Baroda. “Similarly, merchants need to only display their existing single QR code, which can accept payments in both CBDC and UPI. CBDC UPI QR interoperability will further accelerate the adoption of Digital Rupee [CBDC-R] among customers and provide wider payment acceptance infrastructure to promote usage of digital rupee at merchant outlets,” he added.
How can you transact using CBDC?
Since Digital Rupee is currently in a pilot phase, only those individuals who got an invite from their banks to join the e-Rupee network can use it. If you have received an invite from your bank to join the Digital Rupee pilot, you need to download the Digital Rupee app of the respective bank from Google Play Store or Apple iOS.
Artificial Intelligence(AI)
Java Programming with ChatGPT: Learn using Generative AI
By - Metla Sudha Sekhar, Developer and Lead Instructor
Artificial Intelligence(AI)
Basics of Generative AI : Unveiling Tomorrow's Innovations
By - Metla Sudha Sekhar, Developer and Lead Instructor
Artificial Intelligence(AI)
Generative AI for Dynamic Java Web Applications with ChatGPT
By - Metla Sudha Sekhar, Developer and Lead Instructor
Artificial Intelligence(AI)
Mastering C++ Fundamentals with Generative AI: A Hands-On
By - Metla Sudha Sekhar, Developer and Lead Instructor
Artificial Intelligence(AI)
Master in Python Language Quickly Using the ChatGPT Open AI
By - Metla Sudha Sekhar, Developer and Lead Instructor
Office Productivity
Zero to Hero in Microsoft Excel: Complete Excel guide 2024
By - Metla Sudha Sekhar, Developer and Lead Instructor
Astrology
Vastu Shastra Course
By - Sachenkumar Rai, Vastu Shashtri
Data Science
SQL for Data Science along with Data Analytics and Data Visualization
By - Metla Sudha Sekhar, Developer and Lead Instructor
Web Development
A Comprehensive ASP.NET Core MVC 6 Project Guide for 2024
By - Metla Sudha Sekhar, Developer and Lead Instructor
Office Productivity
Mastering Microsoft Office: Word, Excel, PowerPoint, and 365
By - Metla Sudha Sekhar, Developer and Lead Instructor
Marketing
Digital marketing - Wordpress Website Development
By - Shraddha Somani, Digital Marketing Trainer, Consultant, Strategiest and Subject Matter expert
Web Development
Mastering Full Stack Development: From Frontend to Backend Excellence
By - Metla Sudha Sekhar, Developer and Lead Instructor
Finance
Financial Literacy - TDS, Budget, Income Tax Act, GST, Indirect tax
By - CA Rahul Gupta, CA with 10+ years of domain experience, trainer
Leadership
Business Storytelling Masterclass
By - Ameen Haque, Founder of Storywallahs
Future of Marketing & Branding Masterclass
By - Dr. David Aaker, Professor at Haas School of Business
HR & People Management
Human Potential and the Future of Employment
By - Lynda Gratton, Co-chair of the World Economic Forum Council on Work, Wages and Job Creation, Professor of Management Practice
Strategy
ESG and Business Sustainability Strategy
By - Vipul Arora, Partner, ESG & Climate Solutions at Sattva Consulting Author I Speaker I Thought Leader
Finance
Financial Reporting and Analytics
By - Dr. C.P. Gupta, Professor: Department of Finance and Business Economics, University of Delhi
Marketing
Performance Marketing for eCommerce Brands
By - Zafer Mukeri, Founder- Inara Marketers
Once downloaded, you have to register with your mobile number. Do note that just as the same in UPI registration, here in Digital Rupee registration, the bank-registered mobile number must be physically present in the same device that is being used for registration.
After that, you have to create a new Digital Rupee wallet PIN and choose your authentication method i.e., fingerprint or face unlock (if available on your device). Once logged in, the home screen will show you four options i.e., send, collect, load, and redeem. In the Digital Rupee app, there are denominations of currency, just as in paper currency, and each of the notes has a unique serial number just the same as paper currency.
You have to click on ‘load’ to deposit money from your bank account into the Digital Rupee or CBDC wallet. Do note that, unlike UPI, in Digital Rupee the money is not directly deducted from the bank account, it has to be first loaded into the Digital Rupee wallet and then used. To send money to a mobile number or use a QR code mechanism to send money, click on ‘send’.
What are the banks that enabled CBDC-UPI interoperability to date?
Here is a list of some of the banks which enabled CBDC-UPI interoperability as of September 9, 2023:
- Bank of Baroda (BoB)
- Punjab National Bank (PNB)
- Kotak Mahindra Bank
- HDFC Bank
- Yes Bank
- Axis Bank
- Union Bank of India
How will CBDC UPI QR interoperability help you?
Now that UPI QR code infrastructure is linked with the Digital Rupee, this will help users and merchants alike. When you make a UPI payment to your choice of a merchant such as a vegetable vendor, neighborhood shop, restaurant, etc., you scan a quick response code (QR) and then transact the amount. Similarly, Digital Rupee or CBDC transactions also happen like this i.e., you scan a CBDC QR code and then make the payment.
Till now, Digital Rupee transactions needed a different QR code than UPI, so merchants had to use two QR codes i.e., one for UPI and one for CBDC. Interoperability solves this problem by interlinking the UPI QR code technology infrastructure with CBDC. Hence now a CBDC user can scan UPI QR code to make payments using CBDC.
According to Roy from the Bank of Baroda, "There are several advantages of CBDC-R for the common man. It will add one more secure digital channel that customers can use to transact. It will foster financial inclusion and further improve the welfare distribution of funds. It can also help in the prevention of fraud by tracking end use of funds. Cash dependency in the economy is expected to come down hence the problem of counterfeit fake currency notes is expected to decrease.”
What if a CBDC transaction fails?
It could happen that you were trying to make a payment to a merchant using Digital Rupee and due to any issue the transaction failed. Now in this case, the money could either be lying with the remitter's bank (i.e. your bank) or the beneficiary's bank (i.e. the merchant's).
"In both the cases, the existing reconciliation process for UPI will be followed. If a transaction fails, an instant process of automatic reversal will be initiated by the UPI switch. However, in some exceptional cases, if the amount does not get credited to the receiver or is not refunded back to the sender within T+1 day, the customer can escalate the issue through various grievance portals of banks to raise a chargeback. There is no need for the customer to visit the branch for raising a chargeback complaint," says Roy from Bank of Baroda.