Banks are offering incentives for conducting transactions using the e-rupee, the central bank digital currency, prompted by the Reserve Bank of India (RBI) to push volumes. From cashback to reward points, these incentives are on the lines of those offered by the banks on credit and debit cards.
The central bank rolled out a pilot program for the e-rupee on December 1, 2022, and is targeting about 10 lakh transactions daily by year-end. However, retail transactions are still trailing behind the target, averaging around 25,000 a day, resulting in a push from the apex bank.
In addition, the apex bank unveiled new features in September 2023, including linking the digital currency to the country’s real-time payments system, Unified Payment Interface (UPI), in a bid to attract users.
Besides a few large private banks, smaller private lenders are also offering reward points, which can be subsequently encashed for travel bookings, mobile recharges, and cashback through FastTag, which is a popular highway toll collection system.
It is expected that a few more banks are most likely to unveil time-bound promotional incentives related to e-currency transactions. Mostly, the banks are funding these offers on their own.
The central bank looks forward to promoting the usage of its e-rupee. It has been incorporating various use cases and features to provide a fillip to Central Bank Digital Currency (CBDC). This move by banks to offer incentives remains unprecedented, though.
Across the globe, there are a few countries that are already offering rewards in the form of discounts in an effort to promote their respective digital currency. However, the success rate leaves much to be desired.
The incentives are most likely to be short-term measures that will aid in pushing volumes, albeit temporarily. In all likelihood, banks would not keep rolling out such incentives for a long duration unless there is a strong business proposition, which remains clear.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.