The Reserve Bank of India today officially launched its digital token dubbed as Digital Rupee for retail purpose in India. Here’s how it differs from UPI.
Digital Rupee vs UPI: Definition
UPI is an interface used to conduct transactions based on physical currency. Digital Rupee or Central Bank Digital Currency (CBDC) is another form of currency which is similar to fiat currency or in this case rupee.
UPI uses fiat currency to conduct transactions. Digital Rupee or Central Bank Digital Currency (CBDC) is of two types – Retail which can be used by all private sector, non-financial consumers and businesses and is similar to physical cash; and wholesale that only financial institutions can access.
Almost all the banks support UPI transactions. However, only State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank will support the digital rupee during the first phase. Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will later join this pilot programme.
Digital Rupee vs UPI: Availability
UPI-based transactions are available across India. UPI-based transactions are also supported in many other countries such as Nepal, Bhutan, UAE, France, UK, parts of Europe, Malaysia, Singapore and Russia. On the other hand, the digital rupee will be initially available in Mumbai, New Delhi, Bengaluru and Bhubaneswar. Later, it will be available in Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.
Digital Rupee vs UPI: Interest on storage
Physical cash when stored in banks earns interest which is passed on to customers. However, the digital rupee is being introduced for the purpose of making payments like cash and will not attract any interest if stored.
Digital Rupee arrives in India: How’s it different from UPI