State Bank of India (SBI), the country’s largest lender, has introduced unified payments interface (UPI) interoperability for its central bank digital currency (CBDC) application, also known as digital rupee application. This move will enable SBI’s CBDC users to utilise digital rupee for payments through UPI QR codes.
Accessible via the ‘eRupee by SBI’ application, this feature enables SBI’s CBDC users to effortlessly scan a merchant’s UPI QR code for swift transactions. The integration of CBDC with UPI also marks a significant leap for the bank, thereby enhancing the acceptance and utilisation of digital currencies in everyday transactions.
What Is Interoperability And Its Benefits?
Interoperability refers to the ability of CBDC to work together seamlessly with a UPI QR code. SBI’s implementation of UPI interoperability means that customers can use their digital rupee for payments on UPI QR codes, thus providing a unified and user-friendly experience.
Digital rupee, also known as e-Rupee, is a digital token issued by the Reserve Bank of India (RBI) with characteristics similar to physical cash. However, it is currently in the pilot phase and is limited to a select group of invited customers and merchants.
The e-Rupee wallet is issued by the participating bank to the invited customers and is linked to the customer’s bank account, and allows for easy withdrawals and deposits of CBDC into it. Users can then make payments to select merchants and individuals through a unique QR code displayed at their locations from their e-Rupee wallet.
With UPI interoperability, customers can also load their digital wallets using their linked bank account, and transfer or receive digital rupee from other users.
This feature benefits merchants as well, as they can accept payments from UPI or the digital wallet using a single QR code. Merchants are not required to replace their existing QR codes or undergo a separate onboarding process to accept CBDC.
Several banks, such as HDFC Bank, YES Bank, Canara Bank, Bank of Baroda, and Kotak Mahindra Bank, have also announced UPI interoperability on their digital rupee applications. This feature will be available to all Digital Rupee users as the RBI's CBDC pilot project progresses further.
Now, with SBI further bridging the gap between CBDC and the extensively-used UPI platform, CBDC integration has received a further boost.
