HomeBlogDifference between UPI and Digital Currency (E-Rupee) clarified

Difference between UPI and Digital Currency (E-Rupee) clarified

The Reserve Bank of India first launched the retail digital rupee (e₹) pilot project on December 1, last year. Prior to this, on November 1, 2022, the central bank introduced a pilot project for the wholesale segment of the digital rupee. UPI is also breaking records with the number of users. This raises the question of what is the difference between UPI and Digital Currency. If you are also confused between the two then this post is for you only. But let’s first understand what is UPI and Digital Rupee.

What is Digital Rupee or E-Rupee?

The digital rupee refers to an electronic version of the Indian rupee (INR), the official currency of India. It is a form of digital currency that is issued and regulated by the Reserve Bank of India (RBI), the country’s central bank.

The digital rupee is intended to coexist with physical cash and coins and aims to provide a secure and efficient way to make transactions and facilitate financial inclusion. However, the digital rupee is still in the pilot project phase, and it is not yet clear when it will be fully launched and made available to the general public.

Its value is the same as cash money, for example, 1 digital Rupee is equal to 1 physical Rupee. Unlike cryptocurrency, the digital Rupee’s value does not fluctuate.

Now let’s understand what is UPI

UPI stands for Unified Payments Interface. It is a real-time payment system developed by the National Payments Corporation of India (NPCI) that facilitates inter-bank transactions. The system is built on top of the Immediate Payment Service (IMPS) for financial transactions and is used for the electronic fund transfer (EFT) between two bank account holders in India. UPI enables users to link multiple bank accounts to a single mobile application and make transactions without entering bank account details, IFSC code, or net banking login credentials. It allows customers to send and receive money, check account balances, pay bills, and do other banking transactions through a mobile device.

Digital Rupee vs UPI

Digital Rupee and UPI are two distinct concepts. While Digital Rupee is a form of currency similar to fiat currency that can be held in a bank account, UPI is an interface used for online transactions using physical currency. UPI allows users to make transactions through their bank account without the need to enter account details or login credentials.

Below mentioned points will clarify the difference between UPI and Digital Currency

  • UPI is a payment medium while E-Rupee is legal tender

The e-Rupee and UPI are two distinct digital technologies that are used for digital transactions in India. The e-Rupee is a digital form of the Indian rupee, which is the official currency of India.

It is issued and regulated by the Reserve Bank of India (RBI), the country’s central bank, and is a legal tender. This means that it can be used to make transactions just like physical cash and coins.

On the other hand, UPI (Unified Payments Interface) is a digital platform that enables transactions to happen digitally, but it is not a currency in itself. UPI is a system that facilitates fund transfers between banks and enables customers to access and make transactions across multiple bank accounts through a single identification.

  • E-rupee transactions bring more anonymity

Digital currencies offer a higher level of anonymity compared to traditional forms of currency like cash or bank transfers because they allow for transactions without requiring personal identification information.

However, it’s important to note that while digital currencies may provide anonymity, they are not completely anonymous as in some cases transactions can be traced back to the parties involved by using specialized tools and techniques. Additionally, it’s essential to be aware that using digital currencies for illegal activities is strictly prohibited and can result in severe consequences.

  • No need for Bank accounts for digital currency

Transactions made through digital methods such as UPI, NEFT, or RTGS require the involvement of a bank, whereas, with the E-Rupee, funds are transferred directly between digital wallets.


In simpler terms, the e-Rupee is a digital currency and UPI is a digital platform that enables financial transactions, but the e-Rupee is a legal tender, whereas UPI is not a currency, but a system that enables transactions. Hope this clarifies the difference between UPI and Digital Currency.


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