Where and How to Use e₹

e₹ is the digital form of the existing legal tender (paper notes and coins) in India. The RBI has launched e₹ in the same denominations as the cash tender currently in circulation. Thus, e₹ would exist as a digital token, standing in for the money we use. The RBI intends to distribute this mode of transaction through Token Service Providers (TSPs), who will then distribute e₹ to end users.

The banks participating in the e₹ pilot program, including HDFC, will then acquire the tokens from RBI via the TSP merchants. The issuance of e₹ will be processed online, helping the RBI avoid operational costs like printing, storing, or transporting physical cash.

e₹ needs to be stored in a digital wallet, which, like an app, you can download and keep on your cell phone and other devices. You can then conduct financial transactions using e₹ stored in this wallet. Currently, the e₹ app is available for Android users only.

As a participating retailer or customer, you can conduct person-to-merchant (P2M) and person-to-person (P2P) transactions using e₹. You can also pay retailers using QR codes displayed at their places of business. For instance, you can pay for purchases at retail stores and shopping malls and transfer funds between accounts. Essentially, you can use e₹ in the same way as you would use cash.

The RBI has launched the pilot program of e₹ in four Indian cities currently. So, suppose you reside in Mumbai, New Delhi, Bengaluru or Bhubaneswar, and have a bank account in one of the participating banks (HDFC Bank included) and have been invited by your bank (during this pilot phase). In that case, you can download the bank’s digital wallet to conduct transactions.

After the pilot phase, the RBI intends to extend e₹ services to cities like Ahmedabad, Hyderabad, Kochi, Lucknow, Guwahati, Gangtok, Shimla and Patna.

Having explained how and where to use e₹, let us assess its many benefits. They include the following:

Low Costs of Transaction

You can make payments with e₹ without concern for high transaction costs. Since banks don't need separate settlement infrastructure, you won't have to pay any fees to banks or intermediaries for e₹ services.

Secure Mode of Transaction

Several risks are associated with carrying physical cash, including theft, counterfeit currency, etc. The most significant benefit of e₹ is that it is incredibly secure. The transactions are end-to-end encrypted making it a safer, more secure mode of transaction.

Low Settlement Risks

The RBI will consider transactions made using e₹ as final, which reduces settlement risks within the financial system and minimises the need for interbank settlements. This is similar to UPI payment systems, where digital currency is transferred directly, much like cash, rather than adjusting bank balances.

Financial Inclusion

People from rural pockets of India have limited to no access to conventional banking services. They still struggle to participate in India's financial system. The RBI's e₹ launch intends to address this issue and take measures to include such individuals in the economic system.

Increased Efficiency and Liquidity

The benefits of e₹ also include the potential to speed up financial transactions, making them more efficient. e₹ eliminates the need to exchange cash physically, nor do you have to wait for banks to clear your cheques. Plus, you can conveniently liquify and scale your transactions.

With the launch of the e₹, the RBI is on a mission to strengthen India's digital economy and make online transactions risk-free. e₹ will also reduce the need for card networks and payment gateways. Once e₹ is launched nationwide, you can conduct transactions conveniently, with total anonymity, and enjoy quick settlements.

Click here to download the app from the Google Play store.

Click here to read more on how CBDC works in India.

​​​​​​​*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.