Can e-rupee offer a safer payment alternative amid rising UPI fraud?

e-rupee transactions are directly initiated by users, lowering social engineering risks—but not eliminating them

- Shipra Singh

If you've ever hesitated before approving a UPI request or double-checked a QR code before scanning, you're not alone. As UPI becomes central to everyday payments, concerns around fraud are rising alongside its growth. According to government data shared in Parliament, 1.064-million UPI fraud cases worth ₹805 crore were reported in 2025-26 (till November).

The Reserve Bank of India’s proposal to introduce a one-hour cooling-off period for new or high-value UPI payments above ₹10,000 is the latest step aimed at curbing such frauds. At the same time, another digital payment option is quietly evolving in the background: e-rupee, or India’s central bank digital currency (CBDC).

After nearly three years of pilot runs, a question arises—can this digital cash offer safer alternative to UPI? The answer lies in understanding how the two systems work.

UPI vs e-rupee

For most users, paying via UPI and paying with the e-rupee can look similar. Both involve scanning a QR code and approving a transaction on your phone, after which money moves from the sender to the receiver.

But underlying architecture is fundamentally different. In UPI transaction, money moves from one bank account to another through a network involving banks and settlement systems. “UPI is an overlay payments system on bank accounts, cards and credit lines to transfer funds,” said Mihir Gandhi, partner and payments transformation leader, PwC India.

‘The e-rupee operates differently. It is retail CBDC issued by RBI—essentially digital cash. So while UPI moves money between bank accounts, epee transfers value stored as tokens in a wallet, similar to physical cash, said Ranadurjay Talukdar, partner and payments sector leader, EY India.