Retail CBDCs, like “cash”, are primarily used for retail payments.
DFC FIRST Bank is collaborating with ToneTag, a global provider of contactless and voice technology solutions, to enable digital rupee payments at the point of sale. This follows the Reserve Bank of India (RBI) pilot launch of a Central Bank Digital Currency (CBDC) for retail users.
RBI launched a retail digital rupee (e₹R) pilot with 4 banks in 4 cities, including IDFC FIRST Bank, on December 1, one month after testing a wholesale CBDC.
As part of the pilot project, digital currencies will be issued in equal denominations and distributed through financial intermediaries, and users will be able to make transactions through digital wallets provided by participating banks.
It will be a digital rupee (e₹-R) denoting legal tender in the form of a digital token and issued in the same denomination as banknotes and coins and will be distributed through intermediaries, i.e. banks. According to RBI, users will be able to transact with e₹-R through digital wallets provided by participating banks and stored on mobile phones or hardware wallets to facilitate exchanges between users. person to person (P2P) and person to person to seller (P2M). ) works. e₹-R will continue to provide physical money features of security, trust, and ultimate settlement. Like cash, it will not earn interest and can be converted into other forms of money, such as bank deposits.
Madhivanan Balakrishnan, COO, IDFC FIRST Bank, said, “This solution will change how merchants transact, and IDFC FIRST Bank is a proud partner in this collaboration. Digitization of cash payments is one more step in making transactions easier for our customers. As a bank that firmly believes in the ‘Customer First’ approach this initiative aligns well with the same.”
Kumar Abhishek, founder & CEO ToneTag, said, “We are glad to collaborate with IDFC First Bank and participate in the first phase of the CBDC retail pilot. In this pilot, ToneTag will provide solutions through which merchants will be enabled to accept the digital currency. With this launch, India becomes one of the only few countries Globally to take this leap of digitalizing cash and reap its great potential to reduce counterparty credit and liquidity concerns, as well as increase the efficiency of payments and securities settlement. This indeed is going to be India’s decade and many kudos to RBI.”
The main reasons India is considering issuing a CBDC are, among other things, the need to reduce transaction costs associated with cash management, promote financial inclusion, increase sustainability, efficiency, and innovation in payment systems, and increase efficiency in payment systems, promoting innovation in cross-border payments and giving the general public access to the uses that private virtual currencies can offer without the associated risks.