 "digital payments")
The Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) are strategically targeting offline and feature phone-based payments, along with purpose-defined transactions, to propel the adoption of the central bank-backed digital currency (CBDC), according to a report by The Economic Times (ET).
The shared vision of both the RBI and NPCI is to streamline CBDC usage, making digital payments as straightforward as traditional cash transactions. To this end, the RBI has established a sandbox allowing startups to experiment with various CBDC use cases. Despite initial expectations for daily transactions to reach over a million by the year-end, the current figures hover in the tens of thousands.
According to ET, the challenge lies in CBDC not offering a distinct advantage over existing Unified Payments Interface (UPI) transactions, hindering widespread customer adoption. Additionally, UPI 123PAY for feature phone users allows instant and secure payments by calling an interactive voice response (IVR) number.
Despite the widespread adoption of the UPI interface, industry insiders do foresee a surge in CBDC usage once innovative use cases emerge. The programmable nature of CBDC opens up possibilities for direct benefit transfers, targeted cash disbursals, or even allocating pocket money for specific purposes, such as canteen expenses for children.
Neeraj Singh, co-founder of Xaults, told ET that the current limitation lies in banks lacking the necessary infrastructure to develop products on CBDCs. Anticipating future advancements in banking capabilities, industry players expect a proliferation of diverse use cases, driving the widespread adoption of CBDC wallets.
