RBI's Digital Rupee facilitates fast and efficient transactions, aiming to enhance financial inclusion while providing a secure and regulated digital alternative to physical cash.
In a significant development, RBI has announced the interoperability of QR codes for UPI and the Central Bank Digital Currency for retail ("CBDC-R") as part of its ongoing E-rupee pilot project. This move is designed to further enhance the adoption and acceptance of both UPI and CBDC-R, streamlining the payment process for both consumers and merchants.
Both UPI payments and the use of CBDC-R can be initiated by scanning a QR code that will fetch the recipient's details. The novelty lies in the fact that, with this interoperability, the same QR code can be used to make payments to either a merchant's bank account linked to UPI or the merchant's CBDC-R wallet.
Several banks, including Axis Bank, SBI, Kotak Mahindra Bank, and HDFC Bank, have already introduced UPI interoperability in their Digital Rupee applications, showing commitment to simplifying transactions and improving financial inclusion. National Payments Corporation of India (“NPCI”) has also issued instructions to facilitate this initiative, ensuring that both CBDC-R and UPI users can enjoy a seamless and interconnected payment experience.
As per the NPCI instructions, members shall implement the following for enabling interoperability and acceptance of UPI QR Codes for Digital Rupee transactions:
In conclusion, RBI's efforts to bridge the gap between CBDC and UPI QR codes demonstrate the Central Bank's commitment to modernizing India's payment ecosystem. It opens new avenues for the use of the Digital Rupee and strengthens its position as a viable alternative to traditional cash. (Compliance by November 30, 2023)