The introduction of the digital rupee is anticipated to result in a significant change in how we go about our daily business. In addition to making our lives better, it also attempts to push government entities to make payments more quickly. The economy is anticipated to prosper as a result. In the article that follows, we will go over the implications of the digital rupee. But first, if you’d want to learn more about the fundamentals of the digital rupee, click here.
The motivation behind the Digital rupee
While not needing to carry wallets or worrying about losing cash, makes life more convenient for a person who uses the digital rupee, these are only the secondary benefits. Adopting the digital rupee will primarily assist the government in overcoming some challenges and enhancing the flow of funds into and out of the country. We’ll quickly discuss these concerns and the potential implications of the digital rupee. If you wish to learn in-depth analysis, purpose, and framework of the digital rupee click here.
Reduce printing cost
The cost of printing money is very high. It cost about 4012.10 Cr. between July 2020 and March 2021. From July 2021 to March 2022, the cost of printing the currency was roughly 4984.80 Cr. This is a big sum of money being used. Additionally, printing incurs additional costs for shipping, storing, etc. The environmental consequences of creating paper money have not even been taken into account. By introducing the digital rupee, the government intends to do away with this expense.
Overcome geographical barrier
Anyone who has traveled outside of their country is aware of the restriction on bringing cash across borders. One of the biggest beneficiaries of remittances is India. It indicates that there have been several unlawful or unauthorized methods of making a foreign exchange in the past. With the adoption and integration of the digital rupee, it would become easier to transfer money across borders and there would be less chance of many unregulated exchange channels appearing.
Boost economy
The economy could expand in a wide variety of ways. Reducing paper money suggests that there is less counterfeit money available. Payments can be processed 24/7 with little to no mistakes. Having self-created digital currency boosts confidence in the rupee around the world and is a source of pride.
What is it for day-to-day users?
Above we discussed a bigger picture of how the digital rupee will create an impact nationwide. But how will this impact day to day life of a common citizen? We’ll examine a few significant benefits and drawbacks that affect everyday consumers.
Merits
- E-rupee ensures privacy. The way the transaction is carried out is such that there are no middlemen. Blockchain technology handles this entire procedure. Hence, no entity keeps records of transactions.
- No transaction fees. Processing payments is completely free, unlike some other digital payments such as Internet banking, credit card, and debit card which charge you a fee. Well, do you know there is one more digital payment that has been free till now but might become chargeable in the future? It’s UPI, click here to know why it might become chargeable in the future.
- No more losing or tempering of cash. Of course, the primary reason is to proceed toward a cashless economy. This will reduce the risk of receiving counterfeit currency and
Demerits
- People must learn a new platform’s functionality because the new payment method uses new technologies. This can bring some resistance as not everyone is comfortable with new technology. Also, many people might prefer to continue with the existing technology such as internet banking or credit card even if it attracts fees as it is more established and familiar to use as compared to learning a new piece of technology altogether.
- There are currently relatively few locations that will accept E-rupee because it is still in its early stages. This means as of today you cannot completely depend upon E-rupee. You will still need to have alternate payment options.
- E-rupee cannot be exchanged for cash. Once you have brought a certain amount of E-rupee in your wallet you need to use it digitally. There is no provision to convert your digital rupee into cash.
Conclusion
On a larger scale, it is safe to say that the benefits and implications of the digital rupee will greatly outweigh the drawbacks. It will, however, take some time. The E-rupee currently has limited functionality and usability. E-rupee is a choice for individuals who wish to keep up with the latest technology or who like to stay ahead of the curve.