What is The Difference Between Digital Rupee and UPI?

A month after opening up India’s first token-based digital currency for wholesale users, the Reserve Bank of India in December 2022 launched a pilot for a closed group of retail users as well.

With this announcement, India’s Central Bank Digital Currency (CBDC) or e-Rupee is now open for both wholesale and retail segments, even though it is only for a close group for now. Select residents of Mumbai, Bengaluru, New Delhi, and Bhubaneswar can register and use Digital Rupee.

One of the primary reasons to launch the Digital Rupee is to eventually reduce physical cash in circulation, which will also reduce the expenses of printing them.

To kickstart the pilot in the retail segment, which is known as Digital Rupee – Retail and is symbolised as e₹-R, the RBI has identified eight banks for phase-wise participation. They are as follows:

  • State Bank of India
  • ICICI Bank
  • Yes Bank
  • IDFC First Bank
  • Bank of Baroda
  • Union Bank of India
  • HDFC Bank
  • Kotak Mahindra Bank

Based on the feedback on its usage, the RBI might expand the scope of this pilot project and include more banks, users, and locations.

What is Digital Rupee – Retail?

In its statement, the RBI said that the e₹-R is a legal tender which is in the form of a digital token. They are being issued in the same denominations as paper currency and coins.

The RBI has mandated banks to distribute the Digital Rupee, which individuals can use to transact through a digital wallet offered by the participating banks.

Interesting Read: RBI Kickstarts Pilot For Digital Rupee With 9 Partner Banks

One can make both Person to Person (P2P) and Person to Merchant (P2M) transactions using QR codes.

What is the difference between UPI and Digital Rupee?

For all practical purposes, India’s CBDC or the Digital Rupee can be used similarly to how one would use the physical currency and has identical features. It is the digital equivalent of paper currency.

As RBI opens up India’s CBDC or the Digital Rupee for a wider use case, individuals and businesses can start transacting with it and even deposit them in banks.

Since all payments using e-Rupee happen over the digital platform, one might wonder how it differs from India’s indigenous payment system, UPI. They are starkly different from each other as UPI is a payment system while the e-Rupee is a digital currency.

To highlight other differences between the two, we have created a quick cheat sheet for you.



e-Rupee or Digital Rupee was created by the RBIUPI was created by the NPCI
It is a currency issued by the RBI in digital formUPI is a platform that enables digital payments for millions of Indians
Payments made and accepted using e-Rupee are anonymous just like cashSince UPI payments are made from a handle, all UPI transactions can be traced by individuals as well as by the authorities
One doesn’t need to have a bank account to use Digital Rupee for paymentsAt least one bank account is mandatory to make and accept digital payments using UPI
Payments using Digital Rupee get deducted or added to the total Digital Rupee one has boughtAn individual’s or merchant’s bank account gets debited or credited when one does a UPI transaction

Is Digital Rupee similar to cryptocurrency?

Digital Rupee and cryptocurrency are not similar.

While both Digital Rupee and cryptocurrencies are made on blockchain technology, they are different in terms of their volatility and value. Cryptocurrencies are highly volatile and are largely used for investment, rather than for day-to-day transactions.

The RBI has said that the value of India’s CBDC, that is the Digital Rupee will be the same as India’s physical currency and will not fluctuate. Thus the value of 1 e-Rupee is equal to 1 INR.

How to buy Digital Rupee?

In the first phase of the rollout, the RBI has mandated four banks – State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank to onboard a closed user group for the usage of the Digital Rupee.

Businesses and individuals can buy Digital Rupee from these banks. If you are one of the few selected individuals or merchants, your bank will send you a link to download the Digital Rupee app.

Here is a step-by-step process to register for CBDC:

  • Verify your SIM card with the same mobile number that is registered with your bank
  • Set App PIN
  • Provide your name and choose wallet
  • Your wallet will be created
  • Now you need to link your bank account number with the wallet you created
  • Enter your debit card details

Once you have finished the above steps, you can start using Digital Rupee for transactions.


This is a very bold step from the RBI that will bring India closer to the cashless economy that India’s leadership has envisioned. Merchants must keep a closer eye on the development so that they don’t lose out and upgrade their systems based on technological advancements.

The RBI has not explicitly mentioned how merchants can get the QR code that will allow them to accept Digital Rupee. We will keep an eye out so that merchants don’t miss out on such an announcement.


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