UPI - Unified Payments Interface
UPI full form is Unified Payments Interface. The first major step taken by India to achieve a cashless economy was the introduction of Unified Payment Interface (UPI). With the help of the new feature, your smartphone can be used as a virtual debit card. You can also receive and send money with the help of UPI.
What is UPI Transaction
Unified Payments Interface (UPI) is a payment system that allows users to link more than one bank account in a single smartphone app and make fund transfers without having to provide IFSC code or account number.
This is a real-time payment system where funds are credited instantly on a real-time basis.
- A smartphone
- An active bank account
- The mobile number must be active and linked to the bank account
- Internet connection
UPI is slowly becoming the most preferred form of digital payment. The UPI interface is compatible with most banks and many digital wallets, and payment applications are embracing UPI. Some of the apps include Google Tez, Paytm, PhonePe and the like.
Participants in UPI:
- Remitter bank
- Beneficiary bank
- NPCI
- Merchants
- Bank account holder
- Payer PSP
- Payee PSP
UPI - Benefits to the Ecosystem participants
Benefits of UPI for Banks:
- There is a universal application for one transaction
- This is a single click Two Factor authentication
- It is safer and more secure
- It enables easy transactions
- Unique Identifier
- Payment basis Single
Benefits of UPI for Merchants:
- Easier fund collection
- There is no risk of storing the customer's virtual address
- This is suitable for e-Com and m-Com transaction
- Tap customers do not need credit/debit cards
- In-App Payments (IAP)
- It resolves the hassle of cash on delivery
Benefits for UPI for Customers:
- It is a single application for accessing various bank accounts
- There is round the clock availability
- You can easily raise a complaint from the mobile app directly
- The use of Virtual ID is secure
Registration in UPI enabled application
Steps to Register:
- You need to download the UPI app from the App Store.
- You can also create your profile by typing in details like your virtual id (payment address), name, and password.
- You can go to 'Add/Link/Manage Bank Account' option and then link the bank and account number with the virtual ID.
Generating UPI - PIN:
- You can select the bank account from which you want to initiate the payment, and follow with any of these options:
Generate and Change M-PIN
- You will get an OTP from the bank on your registered mobile number
- You can enter last 6 digits of your debit card number and the expiry date
- You should enter the OTP and your preferred numeric UPI PIN and click 'Submit'
- Once you click Submit, you will get a notification
- You should enter your old UPI PIN and new UPI PIN and click 'Submit'
What Makes Unified Payments Interface Unique
These features make UPI a very unique platform:
- There is just one singe mobile app to access various bank accounts.
- It facilitates the Immediate transfer of money via mobile devices 24*7.
- The virtual address of the customer for any kind of 'Pull & Push' offers security. The customer does not have to enter information like card number, IFSC code or account number.
- With one click, there is a two-factor Authentication - Aligned with the Regulatory guidelines, and also provides a seamless single click payment.
- Negates the hassle of cash on delivery, or even going to an ATM.
- You can easily share your bills with friends.
- Over the Counter Payments, Barcode (Scan and Pay) based payments, and Utility Bill Payments can be made.
- You can make merchant payment with a single app or in-app payments.
- You can raise complaints directly from the mobile app.
- You can make donations, disbursements, and collections easily.
Performing a UPI Transaction
PUSH
This is when you send money using a virtual address:
- You should log into the UPI application
- Once you login, you can select 'Send Money/Payment'
- Key in the beneficiary's/payee virtual id, account to be debited, and amount
- You will see a confirmation on the screen
- Enter the UPI PIN
- You will get a message on the same.
PULL
This is when you request money:
- You should log into the UPI application
- Once you login, you can select 'Request Money/Payment'
- Key in the beneficiary's/payee virtual id, account to be credited, and amount
- You will see a confirmation on the screen
- Enter the UPI PIN
- You will get a message on the same.
- The payer will also get a notification for the request of money
- The payer will click on the notification and review the payment
- He/she can decide to accept or decline
- If the payment is accepted, the payer will enter the UPI PIN and authorise the transaction
- The payer will get a 'successful or decline' notification
- You will get a notification and SMS from the bank.
UPI Fees and Charges
There are no fees and charges applicable to the UPI platform. The UPI programme was launched with the aim to promote digital transactions. The NCPI had earlier marked the transaction charges to be 50 paise per transaction. However, the Government of India had later cancelled these charges to make sure that more and more people started using the platform.
UPI vs. Cards and Cash
The main aim of the UPI applications is to promote digital transactions and paving way for a cashless economy. With UPI, users can avail the benefit of not carrying physical cash or any form of plastic money. All transactions can be taken care of using their smartphones.
How secure are UPI transactions
UPI transactions are secured using UPI PINs which is a 4-6 digit numerical combination. In addition to that, the applications are highly encrypted and has heavy bandwidth capacity.
Banks Which Offer The UPI Facility
The main banks that offer the UPI facility are given below:
Apps with UPI Feature in India
Below is the list of App that provides UPI Feature:
The entire list of banks that offer the UPI facility can be found on https://www.npci.org.in/what-we-do/upi/live-members.
Who initiated UPI
UPI is an initiative that was taken by the National Payments Corporation of India (NPCI) as they partnered with the Reserve Bank of India and Indian Banks Association (IBA).
NPCI is a firm that handles the RuPay payments infrastructure and is similar to MasterCard and Visa. It enables various banks to interconnect and also transfer funds.
Immediate Payments Service (IMPS) is another initiative by the NPCI. UPI is now considered as an advanced version of the IMPS facility.
What is UPI ID and PIN
The UPI ID is an identification for a bank account which can be used for sending and receiving funds. The UPI PIN is a 4-digit personal identification number has to be entered for authorising the transfer of money via UPI. This PIN can be chosen by the account holder.
What is UPI 2.0?
UPI 2.0 is a new and upcoming version of UPI payment system with improved features and benefits. It is being touted as a more secure and comprehensive service with easier authentication process.
Upcoming Features of UPI 2.0
Although UPI app is chock full of features, UPI 2.0 promises to be a better tool than its predecessor. Here are some of the new features set to be introduced in UPI 2.0:
- Bill Payment:
Currently, users can transfer funds via the UPI system to someone who has a bank account. But UPI 2.0 promises to add the facility of payment of utility bills via UPI app. Bills for electricity, telephone, insurance, mobile, credit cards, even EMI collection. can be paid off using this app at any time and place. Recent reports indicate that 2 banks are set to launch the feature very soon. UPI will integrate Bharat Bill payment system to facilitate bill payments with it.
- Pre-Authorized Transaction:
UPI 2.0 resolves the problem of forgetting pending bill payments by adding the feature of pre-authorized transaction. For bill payments that has to be made regularly, the user can authorize those billers to automatically withdraw the bill amount before the bill due date, thus, facilitating stress-free bill payments. The number of automatic payments can also be limited with an option to set the maximum amount limit and applicable date. Pre-Authorized Transaction will also work for EMIs.
- Biometric Authentication:
UPI based payments are set to become more secure with the introduction of fingerprint mapping technology and iris scanner in UPI 2.0. The facility of biometric payment authentication would be introduced with the help of the Aadhar service. As biometric identification of most Indian citizens have already been collected by UIDAI, that database can be used to authenticate the identity of a user. Phones with fingerprint scanners and high-quality cameras for capturing iris image can be used for biometric authentication, thus bringing an end to the less secure MPIN.
- Check on Speed of Transaction:
UPI 2.0 is looking to add velocity checks for UPI transactions. These checks are there to make sure that fraudulent transactions can be detected and hopefully prevented from completing. Velocity checks are already used by some banks across India to provide better security. Adding this feature in UPI 2.0 would greatly increase its reliability. A suspicious transaction can be reported to the bank and the customer by the UPI app.
- Error Resolution:
If your mobile number is linked to other people's bank accounts, for example the accounts of your family members, the current UPI app shows an error. For UPI to work, the phone number needs to be unique to a person. UPI 2.0 is trying to resolve this issue.
- Scheduled Payment:
Currently scheduling payments is not a feature available in UPI payment system. But UPI 2.0 is set to add this facility adding a much needed flexibility to the current system.
- Aadhaar Based Payments:
UPI 2.0 would introduce payments using Aadhaar numbers. Aadhaar number is unique to an individual, more so than mobile numbers which multiple people could have owned before you. Also, various banks have started linking the accounts to the holder's Aadhar, making it easier to facilitate transaction directly from bank accounts.
Is UPI Secure
UPI transactions use a very high-secure encryption format and this is not easy to tamper with. NPCI's IMPS network now handles around Rs.8,000 crore worth transactions on a daily basis. This has been expected to increase with UPI technology. This also uses a two-factor authentication method, like an OTP, and verifies every transaction.
FAQs on UPI (Unified Payments Interface)
- Is it necessary to download the UPI app of your bank?
No. Users can download any UPI app. Also, it can be your bank app or another bank's.
- What should a user do if the UPI transaction fails but the money is debited from the customer's bank account?
In such cases, the money will be credited back to the user's account within 1 hour. If the money has not been refunded even after this time period, feel free to contact the customer care.
- Money has been debited from my account even though the transaction is still pending? What should I do?
In most instances, the transaction would have been processed. The pending status will be displayed if there are server issues at the payee/beneficiary backend. The issue will be resolved within 48 hours, if not contact the customer care.
- Is it possible to have more than 1 UPI app on the same smartphone and link them to separate bank accounts?
Yes. You can link more than one UPI same to the same bank account number or a different bank account number.
- What are the mobile platforms that UPI can be used on?
UPI can be used on Android and iOS platforms.
- In case I want to register a complaint, how do I do that?
A complaint can be made on the UPI app itself.
- I entered a wrong UPI PIN, what will be the consequences?
If a user enters a wrong UPI PIN, the transaction will fail.
- What should I do if my bank name is not detected in the UPI app?
The first step is to ensure that the mobile number being used is linked to the same bank account. If not, the app will not be able to recognise the bank and the linking process will not be complete.
- Is it possible to pay merchants through UPI?
Yes. Payments can be made online on e-commerce sites if the UPI option is available.
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