Digital currency vs UPI in India 2023

  Theme:  Digital Rupee-Retail (e- R), was launched on December 01, 2022, within a closed user group (CUG) comprising participating customers and merchants. What is digital currency: A type of cash that is available in digital form and may be used for electronic transactions is referred to as “digital currency.”  Example:- e-CNY:- 15 of China’s 23 provinces have received the digital yuan, known as e-CNY, from the People’s Bank of China.   Digital currency VS Cryptocurrency: Digital currency vs UPI:   Here’s an example of how you might use digital currency and UPI in India: Let’s say you want to buy a new phone online from a store that accepts UPI payments. You can choose to pay for the phone using your digital currency, such as by using your debit or credit card to make the payment. The store will process the payment through the UPI system, which will instantly transfer the funds from your bank account to the store’s bank account. You will receive a confirmation of the payment on your phone, and the store will send you the phone once the payment is successfully completed. This entire process can be done quickly and easily, without the need to visit a bank or use physical cash. So the main difference between digital currency and UPI is that digital currency is a type of currency that exists in digital form and can be used for electronic transactions, while UPI is a payment system that allows individuals to send and receive money through their smartphones using a single mobile application. UPI is bank to bank transaction. For example, Person A’s account is in HDFC bank and B’s account is in SBI bank when person A transfers 500 rs to Person B then money from A’s bank account will get transferred to B’s bank account. Therefore, it is a bank-to-bank transaction. Whereas in digital currency there is no role of banks. It is just like cash suppose A transfers rs 500 to B via a Digital wallet. Here there will be no involvement of banks. Here, RBI is directly involved with the users, and this transaction can be tracked by the RBI. Here there is no need for a bank account of a person. So, overall both concepts are different. Benefits of digital currency in India: Increased efficiency: Digital currency can be transferred and verified electronically, which can make financial transactions faster and more efficient than using traditional methods such as checks or bank transfers. Reduced costs: Digital currency transactions can be less expensive than traditional financial transactions, as they often do not require intermediaries or incur fees for things like a currency exchange or bank transfers. Increased financial inclusion: Digital currency can make it easier for people who do not have access to traditional financial services, such as those in rural areas or with limited resources, to participate in the financial system. Improved security: Digital currency transactions can be more secure than traditional methods, as they often use advanced cryptography to protect against fraud and hacking. For example, if the Reserve Bank of India (RBI) were to issue a central bank digital currency (CBDC), it could potentially reduce the costs and risks associated with traditional financial transactions, increase financial inclusion, and improve the overall efficiency of the financial system in India.   Conclusion: The use of Digital currency in India could potentially have several benefits, such as increased efficiency, reduced costs, increased financial inclusion, and improved security. However, it is important to note that there are also potential risks and challenges associated with the issuance of digital currency, and it is not clear at this time whether the RBI will decide to move forward with this idea. References : Digital India vs UPI. Also read : Collectivism vs Individualism – Which is Strong? The Strong Impact of 5G on the global economy