What is UPI?

For the past several months I have been coming across the acronym UPI also known as the Unified Payments Interface. So, as usual, I started to research about it and came up with the article.

So, hop on to know what exactly is UPI:

What is it?

UPI is the initiative brought on the by the National Payments Corporation of India and is monitored by the RBI and IBA (Indian Bank Association). Unified Payments Interface or UPI is a system that allows the user to transfer their funds through their smartphones.

In short, you don’t need to enter the account details, IFSC code and bank name to make the payment. UPI is like an ID that is unique to you and the payment transfers in seconds through IMPS(Immediate Payments Service), unlike NEFT where the bank’s operation timing matter for crediting the fund.UPI eradicates the need for a digital wallet, credit or debit cards.

How it works?

1. For using the UPI service, the user has to create a Virtual Virtual Payment Address or VPA unique to their identity.
2. Link the VPA to their bank account.
3. VPA becomes their unique financial identity or address through which payments are made or received.
4. There is no need to enter any bank or card credentials, nor there is any sharing of credentials to a third party.

Once you have created the VPA, you can use it to receive or send payment ²⁴⁄₇ and even on bank holidays.

What can you do with UPI?

1. Make an instant transfer of funds using IMPS.
2. It is a single application that can access all bank accounts.
3. It uses to transfer or receive funds through the user’s account Number with IFSC and Mobile Number with MMID or Mobile Money Identifier.
4. To confirm every payment, you need to punch in the MPIN or the Mobile Personal Identification Number just like the ATM pin.
5. You can also use the USSD service which is message relay between your mobile and the application platform via text for the services of fund transfer, sending money, requesting money, non-financial services, balance Enquiry, and changing your MPIN.
6. Each bank has its own UPI service like SBI Pay, Axis Pay, BHIM, Tez, Phone Pe and many more.
7. It is an easy way to pay for utilities, in-app payments, merchant payments and payment made through scanning the barcode.

Is it secure?

Nandan Nilekani, who is the co-founder of Infosys and advisor to the National Payments Corporation of India(NPCI) has assured that the transactions take place through a highly encrypted format. The number of transactions happening through UPI is approximately Rs.8000 crores per day, and this number is increasing by the day as more people are adopting the UPI format.

There is a two-step authentication feature where the user’s MPIN is used instead of One Time Password we receive in our mobile number as text.

The current situation:

Even though people have adopted UPI as their payments interface, still the mobile wallets like PayTm, Mobikwik and other have not lost their charm. I use PayTm so much that I have literally stopped carrying my wallet.

UPI is still gaining its momentum and is a big step by the Government to turn India into a cashless economy. To sum it up, it can be said the UPI is revolutionizing the banking experience of the country and one can expect many changes in its interface in the near future.

Well, hope it is informative for everyone. If you can add some point to this post, will be most grateful.

As usual, Namaste, Au Revoir, Sayonara and a simple Vanakkam to my readers out there where ever you are.