Main Difference Between UPI & E-RUPI

Understanding UPI, E-RUPI And Online Payments

Digital and online payments have seen tremendous growth in India over the past few years. With the proliferation of smartphones and affordable data plans, more Indians are adopting contactless payment options for everyday transactions. The government and RBI have also pushed for financial inclusion by promoting UPI-based payments. 

Launched in 2016, UPI allows users to instantly transfer money between bank accounts without sharing sensitive bank details. More recently, the RBI introduced e-RUPI in 2021 as a prepaid digital payment instrument for specific purposes determined by the government. The difference between UPI & e-RUPI becomes clear when you compare their purpose—both aim to encourage digital payments, but they differ significantly in their design and use cases.

What Is UPI?

The Unified Payments Interface, or UPI, is an instant real-time payment system that facilitates interbank transactions. It is regulated by the National Payments Corporation of India. UPI allows users to link their bank account to a virtual payment address, which can be in the form of a virtual payment address (VPA) like abc@upi or a mobile number. 

Users can then make seamless peer-to-peer or person-to-merchant transactions by simply entering this UPI ID and validating the transaction using their UPI PIN authentication on their banking app. 

What is E-RUPI?

E-RUPI is a prepaid digital payment solution introduced by the RBI and NPCI in 2021. It is a person-specific and purpose-specific digital payment mechanism. e-RUPI solutions are issued via SMS or QR codes for a specific purpose and recipient. 

The key features of e-RUPI are that it is person-specific (meant for a specific person), purpose-specific (can only be used for a designated purpose), digitally delivered (via SMS/QR code), and cashless (prepaid amount for a designated purpose). 

Key Differences Between UPI & eRUPI

Here are the key differences between UPI & eRUPI

UPI	e-RUPI
UPI is a payment system that allows instant fund transfers between bank accounts using a Virtual Payment Address (VPA) like username@upi	e-RUPI is a cashless and contactless digital payment solution focused on person-to-merchant payments.
UPI transactions can be initiated by both the payer and payee.	Payer e-RUPI transactions can only be initiated by the payer.
UPI supports peer-to-peer and person-to-merchant transactions.	e-RUPI currently only supports person-to-merchant transactions.
UPI transactions are initiated using the payee’s VPA; account details are not shared.	e-RUPI transactions are initiated by transferring the e-RUPI voucher to the recipient’s mobile number; no bank account details are required.
UPI supports fund transfers between any two bank accounts.	An e-RUPI voucher can only be redeemed for a specific good or service by a particular merchant.
UPI transactions are not linked to any specific purpose.	e-RUPI transactions are meant for a specific purpose only, as defined in the voucher.
UPI transactions allow payers to add remarks for payee reference.	e-RUPI transactions do not allow any remarks to be added.
UPI transactions are instant, 24/7 and in near-real time.	e-RUPI transactions may take some time for redemption validation.
UPI is regulated by NPCI.	e-RUPI is administered by the Ministry of Electronics and IT (MeitY)
UPI transactions show details like date, time, and amount in bank statements.	e-RUPI transactions do not show in bank statements as no bank accounts are involved.

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Conclusion

While UPI and e-RUPI both promote digital payments in India, they have clear differences in their design and use cases. UPI has emerged as the most popular online P2P/P2M payment method. 

e-RUPI, on the other hand, is targeted towards person-to-government digital transactions for specific pre-approved purposes. Understanding the difference between UPI & e-RUPI is essential for users, merchants and organisations dealing with digital payments. 

With robust and secure payment solutions, more businesses can offer UPI/e-RUPI acceptance and leverage the growing digital payments opportunity in India.

FAQ

1. What is UPI?

UPI is an instant, real-time payment system that facilitates interbank transactions. It allows users to link their bank account to a virtual payment address like abc@upi and make seamless peer-to-peer or person-to-merchant transactions.

2. What is e-RUPI?  

e-RUPI is a prepaid digital payment solution introduced by the RBI. It is a person-specific and purpose-specific digital payment mechanism issued via SMS or QR codes for a specific recipient and purpose.

3. Can e-RUPI be used for any purpose?

No, e-RUPI can only be used for a specific purpose as defined in the voucher and can only be redeemed by a particular merchant. 

4. Which payment system supports P2P and P2M transactions?

UPI supports both peer-to-peer (P2P) and person-to-merchant (P2M) transactions, while e-RUPI currently only supports P2M transactions.

5. How are e-RUPI transactions initiated?  

e-RUPI transactions are initiated by transferring the e-RUPI voucher to the recipient’s mobile number. No bank account details are required.