Digital Rupee vs UPI Differences: 7 Benefits & Disadvantages

UPI vs Digital Rupee

In simple terms, Digital Rupee or eINR or E-Rupee is a form of currency, whereas UPI is a platform or infrastructure that facilitates digital transactions.

Differences between UPI & Digital Rupee

Digital Rupee or eINR or e-Rupee: Is a digital version of the Indian rupee, the official currency of India. It is a form of electronic money that can be used to make transactions and purchases online. The Reserve Bank of India (RBI) has proposed the creation of a digital rupee as part of its efforts to promote financial inclusion and reduce the use of cash in the economy. However, the implementation and launch of digital rupee is yet to be done by the government of India.

Unified Payments Interface (UPI): UPI is a real-time payment system developed by the National Payments Corporation of India (NPCI). It allows individuals to send and receive money, and make payments for goods and services, using their mobile phones. UPI enables the customer to link multiple bank accounts and transact seamlessly, using a single identifier (VPA) – Virtual Payment Address.

UPI vs Digital Rupee Benefits

UPI (Unified Payments Interface) offers several benefits for users in India:

  1. Immediate and secure transactions: UPI enables real-time money transfers and payments, making it faster and more secure than traditional methods.
  2. Convenience: With UPI, users can make transactions using just their mobile phone number and a virtual payment address (VPA), without the need to share their bank account or card details.
  3. Interoperability: UPI allows users to link multiple bank accounts to a single virtual payment address (VPA), making it easy to switch between accounts and make transactions.
  4. Low cost: UPI transactions are relatively low cost, with minimal or no charges for most transactions.
  5. Wide Acceptance: UPI has been widely adopted by various merchants, banks, and e-commerce platforms, making it easy for users to make payments and transactions at various places.
  6. Easy to use: The UPI platform is simple and easy to use, even for individuals who are not familiar with digital transactions.
  7. 24/7 availability: UPI transactions can be made 24/7, providing users with the flexibility to make transactions at any time.

Digital Rupee Benefits

The benefits of a digital rupee include:

  1. Financial Inclusion: Digital rupee can help to promote financial inclusion, by making it easier for individuals and small businesses to access banking services and make transactions online.
  2. Reducing Cash Transactions: A digital rupee would reduce the use of cash in the economy, which would help to combat corruption and money laundering.
  3. Efficient Transactions: Digital rupee would enable faster and more efficient transactions, as it can be sent and received instantly and securely.
  4. Low cost: Transactions with digital rupee would be relatively low cost, with minimal or no charges for most transactions.
  5. Easy to use: The digital rupee would be simple and easy to use, even for individuals who are not familiar with digital transactions.
  6. Increased Transparency: Digital rupee transactions can be recorded and tracked electronically, which would increase transparency and reduce fraud.
  7. Better Monitoring of Transactions: The Reserve Bank of India (RBI) would be able to monitor and regulate digital rupee transactions more effectively, which would help to maintain stability in the economy.

It’s important to note that these are potential benefits, as the digital rupee is yet to be launched and implemented.

Cons of UPI vs Digital Rupee

While a digital rupee has many potential benefits, there are also some potential drawbacks or concerns that should be considered:

  1. Cybersecurity risks: The use of a digital rupee would increase the risk of cyber attacks and financial fraud, as digital currencies are vulnerable to hacking and other forms of digital theft.
  2. Lack of physical backup: Digital rupee do not have a physical counterpart as cash does, which means that if the digital infrastructure collapses, people could lose access to their money.
  3. Dependence on Technology: A digital rupee would depend on the availability and stability of digital infrastructure, which could be vulnerable to power outages, natural disasters and other disruptions.
  4. Privacy concerns: Digital rupee transactions leave a digital trail that could be used to track individuals’ spending habits, which could raise concerns about privacy and surveillance.
  5. Accessibility for everyone: Not everyone in India has access to smartphones, internet or digital infrastructure, so it could exclude certain segments of society.
  6. Loss of control over monetary policy: Central banks may have less control over monetary policy and interest rates if a large portion of transactions are conducted using digital rupee.
  7. Resistance to Change: People may resist change and may not be willing to adopt new forms of currency, which could slow the adoption and acceptance of digital rupee.

Disadvantages of UPI

UPI (Unified Payments Interface) offers many benefits for users in India, but there are also some potential drawbacks or concerns to consider:

  1. Cybersecurity risks: UPI transactions involve the sharing of sensitive financial information, which could make them vulnerable to cyber attacks and financial fraud.
  2. Limited to India: UPI is currently only available in India, so it is not accessible to users outside the country.
  3. Dependence on Technology: UPI transactions depend on the availability and stability of digital infrastructure and internet connectivity, which could be vulnerable to power outages, natural disasters, and other disruptions.
  4. Limited merchant acceptance: Not all merchants or businesses accept UPI payments, so users may still need to carry cash or use other payment methods.
  5. Lack of customer protection: In case of disputes or fraud, customers may not have the same level of protection as they would with traditional payment methods such as credit or debit cards.
  6. Limited languages support: The UPI platform is mainly in English and Hindi, and not all users may be able to navigate it comfortably in other languages.
  7. Limited Transaction limit: There may be a limit on the amount that can be transferred in a single transaction, which could be a problem for large transactions.

It’s worth noting that some of these concerns of both UPI and eINR/eRupee can be mitigated with proper regulations and security measures.


Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].

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