Experience with Digital Rupee

 I finally tried the Digital Rupee. 

Well, I can hear you asking, what do you mean by Digital Rupee? Isn't most of our transactions already digital? 

Well.... Most of our transactions are digital they are not exactly and necessarily digital money

Digital Rupee is actually issued by the Reserve Bank of India.  It is actually sovereign digital cash, a claim against the RBI (with the other digital money, it is a claim on the bank or the card.) When you pay with digital rupee, (actually token; little later on that, no not the AI compute token, this is blockchain token) the settlement is instant and peer-to-peer as good as the physical money and doesn't rely on the bank and all the settlements. 

All that is fine, why do we need it? why should we care? isn't there IMPS, UPI and all that?

Well, with UPI, cards and all that, there is a need for bank. think of times, the merchant doesn't accept the UPI because there is a cost involved to accept UPI (FWIW, currently the MDR is paid by the government) (Also the reason why there is not much of innovation in UPI, again topic for some other day)

In fact, if done right and in scale, it could reduce the load on banking systems. (we could claim pride on the scale of UPI transactions but in reality it is a strain on the banking systems) In other words it would help to achieve a digital cash economy rather than a cashless economy.

Digital cash is the operating word. The money could be programmed. You can give 500  digital rupee to your driver for your car fuel and even make it specific in which outlet he could spend it. The government can give the money for specific uses and ensure it is used only for that purpose. say School fees, food and so on. You get the drift. (Think about how much money was spent on aadhaar and potential use case and efforts to prevent the leakage in DBT (direct benefit transfers) 

Not just that, you can use it offline (think about the times your UPI app not working) with a tap and pay and can sync later.  With huge amounts of digital rupee, they can be used as escrow as well. say, money will be released to builder only when certain milestones are met.  

With interoperability of UPI and with proper plumbing, it can help even in cross border transfer and international payments. 

In fact, the money would be truly digital and we can leverage the benefits. 

However, it is mostly in pilot stages (very few banks) and you need to download a separate digital rupee app of your bank, do the sim binding,(wallet is bound to the hardware to prevent cloning of the digital cash) kyc and load the money. It is fairly simple and straight forward. It is interoperable with UPI. However to use the programmable features(saying you can use this money for only this reasons) the other person should also have the digital rupee wallet with the same bank. There is also other limitations such as  one digital rupee wallet can hold maximum  of 250 tokens/denominations with a limit of 1lakh (my icici app uses 500, 200 100 rupee images to load. for e.g you can add 1000 to your wallet by clicking the 500 rupee image twice or 200 rupee image five times) In other words, the 500 rupee is one token and it is also to convey it is actually equivalent to cash. 

for this to be truly reach its potential and scale, the government needs partners with big ambitions. Think of what Google and the likes of PhonePe and PayTM did to UPI. with out these partners, UPI wouldn't have reached the scale and potential it has reached.