How CBDC - UPI interoperability will benefit merchants and customers

How CBDC - UPI interoperability will benefit merchants and customers

27 July, 2023

The Reserve Bank of India (RBI) launched the Central Bank Digital Currency (CBDC) pilot programme in 2022. The Central Bank Digital Currency, also known as Digital Rupee, represents a tokenised digital version of the Indian Rupee. It is issued and regulated by the RBI.

Actions have been taken by all participating banks in the Digital Rupee pilot to activate the interoperability between CBDC and the Unified Payments Interface (UPI). Via this, customers can scan a single QR code to pay through the CBDC wallet or UPI.

What does QR code interoperability mean?

Interoperability is a crucial factor for the success of the digital currency of India – the Digital Rupee. UPI is one of the most widely used payment methods in India. Daily transactions through UPI touch 31 crores. An interoperable QR code enables basic QR payment acceptance terminal to support Scan & Pay feature from various factors and payment options.

HDFC Bank became the first bank in India to activate interoperable QR for its merchants and customers. It announced the availability of UPI QR codes that will be compatible with the Digital Rupee, i.e., CBDC. Under the pilot programme, HDFC Bank registered 1 lakh+ customers and 1.7 lakh+ merchants in early July 2023.

How it will help merchants and customers

QR Code interoperability will pave the way for seamless transactions between customers and merchants. It will allow merchants to have one QR displayed for accepting payments from UPI or from the Digital wallet. It will enhance the use of the Digital Rupee in day-to-day transactions.

As a merchant, you do not need to replace current QR codes. You only need to display a single QR code on your storefront or via the banking mobile application. The existing QR code will be interoperable, allowing a simple QR payment acceptance terminal. It will accommodate the Scan & Pay feature through multiple payment options.

Moreover, if you are an HDFC Bank Digital Rupee customer, you can transact using the funds available in your Digital Rupee (CBDC) wallet by scanning the UPI QR code.

HDFC Bank is allowing users to download and register on the Digital Rupee app in Delhi, Mumbai, Bhubaneshwar, Chandigarh, Ahmedabad, Bengaluru, Hyderabad, Guwahati, Gangtok, Indore, Bhopal, Pune, Lucknow, Patna, Kochi, Shimla, Goa, Jaipur, Kolkata, Chennai, Ranchi, Nagpur, Vishakhapatnam, Varanasi, Pondicherry, and Vijayawada.

HDFC Bank customers can use the 'Digital Rupee' application for transacting in digital currency. This application is presently supported by Android Version 10+ users in selected cities and will be released for iOS users soon.

Click here to read more on how CBDC works in India

​​​​​​​*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.

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