Digital Rupee: What is the Digital Rupee and how is it different from UPI?
Digital Rupee: People in India are rapidly adopting digital payments. Most people use UPI to transfer money within seconds. However, there is now another term gaining attention in the world of UPI: the Digital Rupee. Many believe that the Digital Rupee and UPI are the same thing, but that is not the case. Although both are used for digital payments, the way they operate is completely different.
What is the Digital Rupee?
The Digital Rupee is a Central Bank Digital Currency issued by the Reserve Bank of India. Simply put, it is a digital form of physical cash. Just as you might have a ₹100 note, the Digital Rupee is equivalent to ₹100; the only difference is that it is held in a mobile app or a digital wallet.
What is the difference between UPI and the digital rupee?
The main difference when comparing UPI and the digital rupee is that UPI is a payment system, whereas the digital rupee is a currency in itself. When you send money via UPI, funds move directly from your bank account to the recipient's bank account. In contrast, with the digital rupee, money moves from a bank account to a digital wallet and is then transferred to another person's digital wallet. Essentially, it functions just like a cash transaction.
How does it work?
To use the digital rupee, you will need a digital rupee wallet from a bank participating in this RBI project. Digital rupees are loaded into the wallet from your bank account. You can then send digital rupees by scanning a QR code or by transferring them directly to another wallet.
What are the risks involved?
The digital rupee is quite secure, but that does not mean it is free from risk. If you lose your mobile phone and the wallet is not secure, it could lead to problems.
