Where and How to Use e₹

21 April, 2023

During the Union Budget 2022-2023, Finance Minister Nirmala Sitharaman announced the RBI’s intention to launch the country’s official Central Bank Digital Currency (CBDC). Now, HDFC Bank has started issuing virtual currency to select participants, to conduct transactions through a digital wallet. Let us understand how to use Digital Rupee (e₹) and its benefits in this article.

How To Use e₹ ?

e₹ is the digital form of the existing legal tender (paper notes and coins) in India. The RBI has launched e₹ in the same denominations as the cash tender that is currently in circulation. Thus, e₹ would exist as a digital token, standing in for the money we use. The RBI intends to distribute this mode of transaction through Token Service Providers (TSPs), who will then distribute e₹ to end users.

The banks participating in the e₹ pilot program, including HDFC, will then acquire the tokens from RBI via the TSP merchants. The issuance of e₹ will be processed online, helping the RBI avoid operational costs like printing, storing or transporting physical cash.

e₹ needs to be stored a digital wallet which like an app you can download and keep on your cell phones and other devices. You can then conduct financial transactions using e₹ stored in this wallet. Currently the e₹ pp is available for Android users only.

Where To Use e₹ ?

As a participating retailer or customer, you can conduct person-to-merchant (P2M) and person-to-person (P2P) transactions using e₹ . You can also pay retailers using QR codes displayed at their places of business. For instance, you can pay for your purchases at retail stores and shopping malls and transfer funds between accounts. Essentially, you can use e₹ in the same way as you would use cash.

The RBI has launched the pilot program of e₹ in four Indian cities currently. So, if you reside in Mumbai, New Delhi, Bengaluru or Bhubaneshwar, and have a bank account in one of the participating banks (HDFC Bank included) and have been invited by your bank (during this pilot phase), you can download the bank’s digital wallet to conduct transactions.

After the pilot phase, the RBI intends to extend e₹ services to more cities like Ahmedabad, Hyderabad, Kochi, Lucknow, Guwahati, Gangtok, Shimla and Patna.

Benefits Of e₹

Having explained how and where to use e₹ , let us assess its many benefits. They include the following:

• Low Costs of Transaction
  
  You can settle your payments made in e₹ without worrying about high transaction costs. Banks do not need to invest in separate settlement assurance infrastructure, and thus, as the user, you will not need to pay any fees to the banks or intermediaries providing e₹ services.
  
  

• Secure Mode of Transaction
  
  There are several risks associated with carrying physical cash, including theft, counterfeit currency, etc. The most significant benefit of e₹ is that it in incredibly secure. The transactions are end-to-end encrypted making it a safer, more secure mode of transaction.
  
  

• Low Settlement Risks
  
  The RBI shall deem transactions conducted via e₹ as final. This feature lowers the settlement risks within the financial system, thus reducing the need for interbank settlements. This is akin to UPI payment systems wherein the digital currency is transferred like cash, as opposed to bank balances.
  
  

• Financial Inclusion
  
  People from rural pockets of India have limited to no access to conventional banking services. They still struggle to participate in India’s financial system. The RBI’s e₹ launch intends to address this issue and take measures to include such individuals into the financial system.
  
  

• Increased Efficiency and Liquidity
  
  The benefits of e₹ also include the potential to speed up financial transactions, making them more efficient. e₹ eliminates the need to exchange cash physically, nor do you have to wait for banks to clear your cheques. Plus, you can conveniently liquify and scale your transactions.
  
  With the launch of the e₹ , the RBI is on a mission to strengthen India’s digital economy and make online transactions risk-free. e₹ will also reduce the need for card networks and payment gateways. Once e₹ is launched nationwide, you will be able to conduct transactions conveniently, with total anonymity and enjoy quick settlements.
  
  

Click here to download the app from the Google Play store.

Click here to read more on how CBDC works in India

​​​​​​​*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.