Digital Rupee, e₹, and e₹ wallet: Everything you should know about this digital currency

Our lives have become increasingly digital, and digital transformation is accelerating. Every aspect of Indian society, from basic household chores to the functioning of esteemed and prestigious organizations, such as banks, hospitals, schools, etc., has gone digital, making us a digital nation. In an effort to revitalize the "Digital India" initiative, the Reserve Bank of India (RBI) has begun implementing the Digital Rupee (e₹) for specific use cases since November 2022. The Digital Rupee (e₹) is the latest, most advanced step in the digital revolution in India, providing citizens with an efficient and secure way to conduct digital transactions.

Considering that electronic wallets are still in their infancy, some questions will arise in the minds of consumers. Read on to find out answers to “The Whats, The Whys, and The Hows” of e₹ and e₹ wallets.

What is the Digital Rupee or e₹? 

Also known as Central Bank Digital Currency (CBDC), e₹ is a digital form of currency notes issued by the central bank. Consumers need an e₹ wallet to carry and use digital currency. It is a bank-issued wallet that can be linked to your bank account to load cash into it.

What are the advantages of the digital rupee?
 

Digital currency is a fast, secure, and reliable method of daily payments and monetary transactions.

• Digital rupee is a sovereign currency issued by the RBI. It is accepted as legal tender by government bodies, companies, and merchants as a reliable payment method.
• You can easily convert digital rupees into bank deposits and vice-versa.
• Like handling physical cash, having a bank account is not necessary to perform digital rupee transactions which makes it more accessible. However, you need a bank account linked to your digital wallet to load and withdraw money.
• Digital currency is immune to physical damage such as rips, tears, burning, etc.
• Since it is regulated by the apex banking authority in India, it is secure from frauds/scams and has a very low risk of volatility.
• You can easily access your digital rupees from your and mobile devices at your convenience.

Will e₹ replace cash, Debit Cards, and Credit Cards? 

No. e₹ will not replace existing forms of money but act as an additional method for users to make payments. The RBI said, “CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems.”

What is the difference between digital rupee and cryptocurrency?

While the digital rupee is similar to cryptocurrency in terms of payments, safety, and reliability, it is not a decentralized currency like cryptos are. Cryptocurrencies are unregulated, which means there is no governing body to regulate their norms.

On the other hand, the digital rupee is a sovereign currency, and it is recognised as legal tender by the Government of India and other organisations. You are free to use this currency anywhere for purchases and sending money. Moreover, cryptocurrencies fluctuate based on supply and demand, but the digital rupee has a fixed denomination whose value will not change like cryptocurrencies.

A significant difference between e-rupees and cryptocurrency is that cryptocurrencies can be traded depending on price fluctuations, while e-rupees cannot, and it works like a physical currency. 

Who can use e₹? 
 

A few customer banks, such as IDFC FIRST Bank, have been chosen to be a part of the Closed User Group (CUG) in the first pilot of central bank digital currency - retail. The respective bank's customers can use the currency, avail of its benefits, and get a glimpse of the future of digital currency in India.

What is e₹ wallet? 
 

An e₹ wallet is like your physical wallet in electronic form. Available on Android and iOS devices, the digital wallet will store your digital currency exactly as the physical bank currency notes are stored in the physical wallet.

How can I load money into my e₹ wallet? 
 

Loading money into your e₹ wallet is easy and quick. You need to download the CBDC app and register on the number whitelisted and linked to your IDFC FIRST Bank account. Once you have registered successfully and your wallet ID is created, you can load the wallet through the IDFC FIRST Bank account or UPI apps on the same device by following the steps below:

Step 1 - On the app home page, tap ‘Load’.

Step 2 - Enter the amount or select denominations by swiping up for the amount you want to add. Tap on ‘Load Digital Rupee’.

Step 3 - You can choose any of the modes mentioned below to add digital rupees to your wallet and follow the onscreen instructions.

• Transferring funds from your linked bank account
• Transferring funds through different UPI apps

Step 4 - After successful PIN verification, the linked account will be debited, and the e₹ (Digital Rupee) will be credited to your digital wallet in the same denomination instantly. 

How to redeem an e₹ wallet and transfer that to a bank account? 
 

Redeeming digital rupees from the e₹ wallet is straightforward. All you have to do is:

Step 1 - Tap Redeem on the app home page.

Step 2 - Select denominations by swiping up for the amount you want to redeem. Tap on ‘Redeem Digital Rupee’.

Step 3 - Choose the linked bank account to be credited and follow the onscreen instructions.

Step 4 - After successful PIN verification, the linked account will be credited with the equivalent amount, and e₹ wallet will be debited instantly. 

Whom can you pay and how using e₹ wallet? 
 

e₹ wallet consumers can only perform wallet-to-wallet transfers for payments to start with, i.e.

• Another user with a CBDC wallet (IDFC FIRST Bank and Non-IDFC FIRST Bank)
• Merchants with CBDC wallet via QR code scan-and-pay mechanism.

To transact using a digital wallet,

Step 1 - Tap on Send on the app's homepage.

Step 2 - You can send e₹ via Digital Rupee VPA or phone number of the beneficiary who has registered for the e₹ (Digital Rupee) or Scan e₹ (Digital Rupee) QR code.

Transactional limitations of e₹ wallet 
 

The digital rupee has the same denominations as the existing physical Indian currency, such as 50 Paise, Re 1, Rs 200, Rs 500, etc. There are, however, certain restrictions regarding holding capacity, per-day loading, per-day transfer, and per-day unloading.

e₹ Wallet Limitations:
 

Conclusion:
 

Central bank digital currencies (CBDCs) offer several advantages over traditional currencies such as faster and cheaper transactions, better financial inclusion and increased security. IDFC FIRST Bank is at the forefront of this revolution and is committed to providing its customers with the best possible access to digital currencies.




 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.