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In a move expected to revolutionize the adoption of Central Bank Digital Currency- retail or e-Re Retail, the National Payments Council of India (NPCI) and the Reserve Bank of India are working closely to make the QR codes of e-Re retail and UPI (unified payments interface) interoperable. This development will enable merchants to receive payments made through e-Re retail using the QR code already available for UPI, eliminating the need for a separate QR code for e-Re transactions.
Formal Implementation in the Coming Weeks
According to reliable sources cited in a report by The Hindi Businessline, the interoperability of e-Re and UPI QR codes will be formally implemented in the next few weeks. Initially, this interoperability will be executed only at the point of payment receipt. While e-Re and UPI will follow separate processes at the backend, the front end will enable seamless interoperability. It's important to note that e-Re operates on a bank wallet mechanism, while UPI is directly linked to users' bank accounts.
Independent Backend Operations
Even with interoperability in place, the payment mechanisms of UPI and e-Re will function as independent entities at the backend. Payments made through UPI will be credited to the receiver's UPI account, while payments made through e-Re will go into the receiver's wallet. This distinction ensures that the operational integrity of both payment systems is maintained.
Driving Merchant Adoption
The decision to introduce interoperability is crucial for increasing merchant adoption of digital currencies, particularly e-Re. A banker familiar with the matter stated, "Banks are trying to popularize and spread the adoption of e-Re among merchants because unless more merchants sign up and the use case for e-Re increases, the adoption will remain poor." Currently, the adoption rate for UPI among merchants is healthy and steadily increasing, with various UPI gateway QR stickers already in place. The resistance to adding another QR sticker for e-Re transactions prompted the decision to make UPI and e-Re QR codes interoperable.
Current State of e-Re Adoption
According to the latest published annual reports of the RBI, the total adoption of e-Re in the country stands at approximately ₹16.39 crore, with retail digital currency contributing less than ₹6 crore. The low adoption rate of e-Re highlights the need for innovative solutions to encourage merchants to embrace digital currencies. The interoperability of e-Re and UPI QR codes aims to address this challenge by simplifying the payment process for merchants, eliminating the burden of managing multiple QR codes.
Unlocking the Potential
By enabling interoperability between e-Re and UPI QR codes, the NPCI and RBI are unlocking the potential for greater acceptance and usage of digital currencies among merchants. This development aligns with the Indian government's vision of a digital economy and the promotion of cashless transactions. As the interoperable QR codes are implemented, merchants will have a streamlined payment experience, making it more convenient for customers to pay using e-Re or UPI.
Looking Ahead
As the first major rehaul of e-Re Retail, the interoperability of e-Re and UPI QR codes marks a significant milestone in India's digital payment landscape. By simplifying the payment process and reducing the need for multiple QR codes, this development is expected to accelerate the adoption of e-Re among merchants. As the implementation of interoperable QR codes approaches, the industry eagerly awaits the positive impact it will have on driving digital currency acceptance and usage, ultimately transforming the way payments are made in India.