Nearly six months after the launch of Central Bank Digital Currency- retail or e-Re Retail, it’s set to undergo the first major rehaul.

The QR codes of e-Re retail and UPI (unified payments interface) may become interoperable in a few weeks from now. That means merchants can receive payments made through e-Re retail using the QR code already available for UPI. They do not have to procure a separate QR code which is currently the practice for e-Re transactions. 

This is something which the National Payments Council of India (NPCI) and the Reserve Bank of India are closely working on.

Also read: e-Re and you: What you should know

According to highly placed sources, in a few weeks formally the interoperability of e-Re and UPI QRs will be implemented. To begin with such an interoperability will be implemented only at the front-end, that is at the point at which payment is received. At the back-end e-Re will follow a separate process and UPI will continue to operate in the current way that it is in place. To put things in context, e-Re operates on a bank wallet mechanism whereas UPI is directly linked to the users’ bank accounts. 

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At the back end even if interoperability comes into place, a payment made through UPI will be credited to the receiver’s UPI account, and a payment made through e-Re will go into the wallet of the receiver. At the back-end, both payment mechanisms will function like independent entities. 

Also read: BL Explainer: RBI’s e-Rupee versus UPI

Why interoperability? 

This upgrade to e-Re is critical to increase the merchant adoption for digital currencies. “Banks are trying to popularise and spread the adoption of e-Re among merchants because unless more merchants sign up and the use case for e-Re increases the adoption will remain poor” said a banker aware of the matter. The merchants adoption rate for UPI is healthy and steadily increasing and they already have QR stickers of various UPI gateways. “We found that there is a resistance from them to pile on another QR sticker and hence the decision to make UPI and e-Re QR codes interoperable”. 

According to the latest published annual reports of the RBI, the total e-Re adoption in the country is it just about ₹16.39 crore. Of this, the contribution of retail digital currency was less than ₹6 crore. 

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