India is moving towards digital transaction with various mediums and reforms being launched to make the country a cashless economy. One such digital advancement launched recently in India is the introduction of UPI.
full form of upi
The UPI full form is Unified Payments Interface.
This is a new mode of payment where one can actually send money from the smartphone at any point of time from any place. In a way, you can say that your smartphone also acts as a virtual mode of payment like a debit card. Another important fact is that you can use this app to send and receive funds in an instant.
Unified Payments Interface UPI
Unified Payments Interface (UPI) is an instant payment system developed by the National Payments Corporation of India (NPCI), an RBI regulated entity. UPI is built over the IMPS infrastructure and allows you to instantly transfer money between any two parties’ bank accounts.
The UPI app was launched in Jan 2016 and was adopted by only a limited number of national banks initially. Within a span of a year, all banks realized the great potential it holds and hence went ahead to their own version of the UPI app.
What is UPI?
UPI is also known as the Unified Payment Interface and just like your email id, this can be taken as your financial address. Similar to your bank account, this remains unique to every individual and will help you to transfer and receive funds instantly using IMPS – Immediate Payments Service. So, now you do not need to transfer funds intrabank using old methods like NEFT, RTGS and cheque. Things will happen instantly all throughout the day even on holidays.
NPCI launched UPI
The UPI was launched by the National Payments Corporation of India also known as the NPCI. With support from the Reserve Bank of India and Indian Banks Association, NPCI has framed this network. It is similar in mechanisms like the RuPay system through which debit and credit cards function.
What is an UPI PIN?
PI-PIN (UPI Personal Identification Number) is a 4-6 digit pass code you create/set during first time registration with this App. You have to enter this UPI-PIN to authorize all bank transactions. If you have already set up an UPI-PIN with other UPI Apps you can use the same on BHIM. (Note: Banks issued MPIN is different from the UPI UPI-PIN, please generate a new UPI-PIN in the BHIM app) Note: Please do not share your UPI-PIN with anyone. BHIM does not store or read your UPI-PIN details and your bank’s customer support will never ask for it.
How to pay somoene through UPI?
When you shop-online, you can pay through UPI when you see UPI as a payment option. On clicking that, you will need to enter your Payment Address (eg – xyz@upi). Once entered, you will receive a collect request on your BHIM app. Enter your UPI-PIN here and your payment will be complete.
How is UPI different from IMPS?
UPI is providing additional benefits to IMPS in the following ways:
- 1.Provides for a P2P Pull functionality
- 2.Simplifies Merchant Payments
- 3.Single APP for money transfer
- 4.Single click two factor authentication
How does UPI work?
UPI is a digital mode that helps you transfer funds from one bank to another without using any account number, bank name, account type or IFSC.
To use UPI to transfer funds, you need to have the following things in place:
- A bank account
- An active mobile number (linked to your bank account)
- A smartphone
- An internet connection
Once these things are with you, the next thing you need is registration on UPI and generation on mPIN.
How to Register on UPI ?
- You can download the BHIM (Bharat Interface for Money) app/bank’s app/third party apps
- Create your profile by adding details such as name, VPA, password, UPI Pin, etc.
- Link the bank account with the VPA to complete the registration process.
- On successful registration and generation on mPIN, you are all set to use UPI.
- To send or receive funds using UPI, you need to have a UPI-based mobile app, e.g. BHIM UPI, BHIM SBI Pay, etc.
- UPI, basically, transfers funds from the sender’s bank account to the receiver’s bank account without revealing bank account details to any of the parties involved in the transaction. Transfers can be done 24 x 7, irrespective of the general bank hours.
UPI can be used in 3 ways
- By entering the UPI ID (or Virtual Payment Address, VPA) of the sender/receiver
- By scanning the UPI QR code
- By entering the receiver’s account number and IFSC Code
The most important aspect of this payment mode is complete privacy and instant transfer. Also, you can link multiple bank accounts to your UPI ID.
Important Features of UPI
whatever transfer was being done in banking using mediums like RTGS, NEFT and cheque can be done through this app now. Following transactions and services can be performed through the UPI:
- Pay mobile bills, shopping bills, restaurant bills, etc.
- You can also use it online in utility apps to make payments or set it as a default payment method for payments.
- E-commerce giants have also started providing UPI payment option through BHIM app (Bharat Interface for Money).
- You can also use this app to transfer funds from one account of yours to the other.
- You can use this app to request money from others.
Important Things to Know about UPI
UPIis a smartphone-friendly application.
Here are some interesting things that you should know about this payment interface that gives it an edge above others
- you can transfer funds between 2 banks using your smartphone
- Users need to create a VPA- Virtual Payment Address or handle and link their bank accounts to it. This is almost like a financial address for them.
- you can now send or receive money from one account to another like sending SMS.
- This is a boon as you do not need to transact within banking hours anymore. This is possible as this App is based on IMPS that functions 24×7.
- The current cap of transactions on this app is ₹ 1,00,000 subject to terms and conditions. This is under revision currently and soon the cap might be increased. Also, many of the banks have their internal caps also.
How to Generate UPI PIN?
- Select the bank account in the app from which you want to carry out transactions
- Once you select the bank account, you will be asked to generate your UPI Pin
- An OTP will be sent to your mobile number registered with the bank account
- Enter this OTP to generate your UPI Pin
- Create your 4 digits UPI Pin which will be required for making all transactions
How to Make a UPI Transaction?
- Open the UPI-based app where you have registered on your smartphone
- Log in to the app using the m-PIN or UPI Pin
- Select the “Transfer/Send Money” option
- Enter the beneficiary’s VPA/Account Details/Mobile Number
- Enter the amount to be transferred
- Enter the UPI Pin to confirm the payment
- Money is transferred instantly and a confirmation message is sent to the user’s mobile number
- Request Money
- Open the UPI-based app where you have registered on your smartphone
- Log in to the app using the m-PIN or UPI Pin
- Select the “Request Money” option
- Enter the payee’s VPA/Select the payee’s VPA from the existing list
- Enter your UPI Pin to generate a request
- A payment request will be sent directly to the payee
- The payee can make the payment directly by clicking “Approve” and entering his UPI Pin
Users can also split bills using the BHIM app
- Bill Payment
- Once logged in to your UPI-based app, select the option “Bill Payment”.
- You will have to add a biller to avail this service
- Enter the amount that you have to pay the bill for
- Enter the UPI Pin to make the transaction
- Your payment will be credited to the biller instantly
- You can pay bills for mobile postpaid, water, electricity, DTH, broadband, gas, etc.
Security of the UPI App
The app is highly secure and has the ability to carry on various transactions at the same time. At present, it handles as much as ₹ 8,000 Crore equivalent transactions on a daily basis. Just as debit card transactions are secured with an OTP, a UPI app is also secured with an MPIN. The transaction is secured with a 4-digit UPI Pin.
UPI Charges and Fees
As of now, there is no fee charged on UPI transactions. Earlier, there was a nominal charge for using UPI. NCPI had fixed ₹ 0.50 per transaction. However, the government has removed all charges to promote digital transactions. Many banks want to promote this app and hence do not want to charge anything to the users as a promotional feature. However, these may change from time to time. There are no charges to download the UPI-based app from online platforms.
Is UPI Better than Cash or Cards?
The whole concept of launching this app was to ensure that Indian people moves towards a cashless economy. Since launch, it has been a huge hit amongst all the users thanks to it being convenient. Though it cannot replace cards and cash immediately, but with time and added features, it will move towards being a better alternate than cash or cards. Currently, a lot of users are using UPI as it is simple to use and convenient. Also, most of the banks are offering freebies and cash backs for using their app.
Benefits of UPI For Customers
- Round the clock transaction facility
- Easy to use
- The transfer can be made instantly
- All bank accounts can be managed through a single app
- Highly secure as no account detail is shared
- VPA ensures no personal details are shared with others
- Single click authentication
- Money can be requested from the payee through the app
- Complaints can be raised directly as well
Benefits of UPI For Banks
- A safe and secure transaction system
- Seamless merchant transaction
- Use of the existing infrastructure ensures no additional cost is incurred by the bank
- Single-click with two-factor authentication
Benefits of UPI For Merchants
- Seamless fund collection
- Instant receipt of fund
- No need for sharing bank details
- No additional or operating cost as opposed to PoS machine
- Suitable for e-commerce platforms
- COD collection made easy with UPI payment