e-RUPI

e-RUPI was jointly developed by the National Payments Corporation of India (NPCI), the Department of Financial Services (DFS), and the Ministry of Health and Family Welfare, with a primary use case of ensuring that government subsidies and welfare payments reach intended beneficiaries without diversion or leakage. The instrument operates on NPCI's UPI platform infrastructure but functions differently from standard UPI person-to-person or person-to-merchant payments.

The mechanics of e-RUPI work as follows: a sponsor (government department, employer, or corporate) transfers funds to an issuing bank or payment service provider, specifying the beneficiary (identified by mobile number) and the purpose or merchant category (e.g., medicines, diagnostic services). The issuing entity generates a unique QR code or SMS-based voucher delivered directly to the beneficiary's mobile phone — no bank account or digital payment application is required on the beneficiary's side. The beneficiary presents this voucher at the designated merchant (hospital, pharmacy, fertiliser dealer) who redeems it through a compatible POS device or QR scanner.

The voucher is prepaid (funds are ring-fenced at the time of issuance), purpose-specific (can only be redeemed at designated merchant categories), and single-use (once redeemed, the voucher is extinguished). These three features make e-RUPI fundamentally different from direct benefit transfers to bank accounts: the recipient cannot misuse the funds for unintended purposes, the sponsor is assured of welfare delivery, and the issuer bears no credit risk.

Initial use cases included Covid-19 vaccination payments, fertiliser subsidies under the PM POSHAN scheme, and employee health benefits from corporates. The RBI permitted non-bank financial entities and corporates to use e-RUPI for employee welfare, broadening its application beyond government programmes.

From a policy perspective, e-RUPI represents the intersection of digital payments, direct benefit transfer (DBT), and last-mile welfare delivery. It addressed the challenge of beneficiaries lacking smartphones or bank accounts — since redemption requires only a basic mobile phone capable of receiving SMS.

For the payments ecosystem, e-RUPI demonstrated the NPCI's ability to build context-specific payment products on the core UPI rail, opening possibilities for targeted corporate vouchers, insurance-linked health payments, and education subsidies. Its architecture also demonstrated how to combine financial inclusion with spending control — a model increasingly relevant for emerging economy governments seeking to reduce subsidy leakage.