Unified Payments Interface (UPI) is a platform that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.
UPI stands for Unified Payments Interface (UPI) which is a platform provided by NPCI to facilitate interoperability amongst various banks. It’s a one stop solution for multiple bank accounts , one app. It allows all account holders to send and receive money using their smartphones with a single identifier – virtual payments address ( VPA) / UPI ID – without entering any bank account information. Therefore, customers do not need to know the payee’s or payer’s IFS code, bank account details, etc. and this makes the process simpler.
All transactions on UPI are authenticated by a 2 factor authentication. A Debit transaction can only be initiated through your VPA / UPI ID on your device and it requires an MPIN to authenticate the transaction. Regulated by NPCI,user share their VPA only instead of sensitive information like account details, IFS Code etc.
A virtual payment address (VPA)/UPI ID is which you create and link to any of your bank accounts to make secure payments. VPA / UPI ID can be used instead of Account & IFSC to transfer funds. Each VPA/ UPI ID is unique to the user.
How is UPI unique?
- Immediate money transfer through mobile device round the clock 24*7 and 365 days.
- Single mobile application for accessing different bank accounts.
- Single Click 2 Factor Authentication – Aligned with the Regulatory guidelines, yet provides for a very strong feature of seamless single click payment.
- Virtual address of the customer for Pull & Push provides for incremental security with the customer not required to enter the details such as Card no, Account number; IFSC etc.
- Bill Sharing with friends.
- Best answer to Cash on Delivery hassle, running to an ATM or rendering exact amount.
- Merchant Payment with Single Application or In-App Payments.
- Utility Bill Payments, Over the Counter Payments, Bar code (Scan and Pay) based payments.
- Donations, Collections, Disbursements Scalable.
- Raising Complaint from Mobile App directly.
Participants in UPI
- Payer PSP
- Payee PSP
- Remitter Bank
- Beneficiary Bank
- Bank Account holders
UPI – Benefits to the Ecosystem participants
Benefits for banks:
- Single click Two Factor authentication
- Universal Application for transaction
- Leveraging existing infrastructure
- Safer, Secured and Innovative
- Payment basis Single/ Unique Identifier
- Enable seamless merchant transactions
Benefits for end Customers:
- Round the clock availability
- Single Application for accessing different bank accounts
- Use of Virtual ID is more secure, no credential sharing
- Single click authentication
- Raise Complaint from Mobile App directly
Benefits for Merchants:
- Seamless fund collection from customers – single identifiers
- No risk of storing customer’s virtual address like in Cards
- Tap customers not having credit/debit cards
- Suitable for e-Com & m-Com transaction
- Resolves the COD collection problem
- Single click 2FA facility to the customer – seamless Pull
- In-App Payments (IAP)
Registration in UPI enabled application
Steps for Registration:
- User downloads the UPI application from the App Store/Banks website
- User creates his/her profile by entering details like name, virtual id (payment address), password etc.
- User goes to “Add/Link/Manage Bank Account” option and links the bank and account number with the virtual id
Generating UPI – PIN:
- User selects the bank account from which he/she wants to initiate the transaction
- User clicks one of the option –
a. Change M-PIN
In the case of 3(a) –
- User receives OTP from the Issuer bank on his/her registered mobile number
- User now enters last 6 digits of Debit card number and expiry date
- User enters OTP and enters his preferred numeric UPI PIN( UPI PIN that he would like to set) and clicks on Submit
- After clicking submit, customer gets notification (successful or decline)
In the case of 2(b) –
- User enters his old UPI PIN and preferred new UPI PIN (UPI PIN that he would like to set) and clicks on Submit
- After clicking submit, customer gets notification (successful or failure)
Performing a UPI Transaction:
A. PUSH – sending money using virtual address
- User logs in to UPI application
- After successful login, user selects the option of Send Money/Payment
- User enters beneficiary’s/Payee virtual id, amount and selects account to be debited
- User gets confirmation screen to review the payment details and clicks on Confirm
- User now enters UPI PIN
- User gets successful or failure message
PULL – Requesting money:
- User logs in to his bank’s UPI application
- After successful login, user selects the option of collect money (request for payment)
- User enters remitters/payers virtual id, amount and account to be credited
- User gets confirmation screen to review the payment details and clicks on confirm
- The payer will get the notification on his mobile for request money
- Payer now clicks on the notification and opens his banks UPI app where he reviews payment request
- Payer then decides to click on accept or decline
- In case of accept payment, payer will enter UPI PINto authorize the transaction
- Transaction complete, payer gets successful or decline transaction notification
- Payee/requester gets notification and SMS from bank for credit of his bank account
Mobile Banking Registration is possible only if the mobile number (which is to be registered) is registered with the Issuer Bank for SMS Alerts/mobile alerts. UPI can be accessed on all platforms viz. Android / iOS – The Apps have been developed by members on Android 4.2.2 and above/iOS 8.1 and above platforms.
Read More: Google Tez UPI based app and its benefits?
There is no concept of loading money in UPI. It’s direct account to account transfer using VPA/ UPI ID. A Wallet usually charges anything between 1 to 4 % for reversal of money from wallet to account. In UPI, money resides within the account itself, hence there is no scope of reversal as well as loading. Daily transaction limit is 1 lakh which is higher than any wallet and it is inter-operable across any UPI app. A wallet is not inter-operable with any other. Sender and receiver party has to have the same wallet to transfer funds. Through UPI, sender and receiving party can choose to have any UPI app available today.
Difference between NEFT, IMPS and UPI
|Transaction initiation point||Must be initiated from the Sender/Remitter bank’s app||Must be initiated from the Sender/Remitter bank’s app||Can be initiated from any bank’s UPI app to debit the chosen Sender/Remitter bank account|
|Types of transfers possible||Only push transfers or payment transactions possible||Only push transfers or payment transactions possible||Both push & pull transfers possible i.e. both Payment & Collect transactions possible|
|Beneficiary details needed||Need Beneficiary bank account details such as IFS code & Account Number||Need Beneficiary Mobile phone number and the MMID for the specific account or Account Number and IFC Code||Need only the Beneficiary UPI ID|
|Beneficiary addition||Pre-addition & bank approval of NEFT Beneficiary needed before transfer can be done||Pre-addition & bank approval of IMPS Beneficiary needed before transfer can be done(except for a few banks)||No pre-addition or approval of Beneficiary required;one can simply transfer to Beneficiary UPI ID|
|Complexity of transfer details||The IFS Codes being bank & branch specific are particularly inconvenient to use||The MMIDs being bank issued & different for each account, are difficult to remember
The IFS Codes being bank & branch specific are particularly inconvenient to use
|The UPI ID is user-generated|
|Speed of transfer||Batch processed at pre-set NEFT timings||Instantaneous,real-time||Instantaneous,real-time|
|2FA(Two factor Authentication)||First factor: Bank specific Internet/Mobile Banking Login ID & password||First factor: Bank specific Internet/Mobile Banking Login ID & password||First factor: First factor is device hardbinding where device ID and SIM(mobile number) combination is stored. User can use UPI app installed only from his device which has his registered mobile number with bank|
|Second Factor: OTP and/or Transaction Password/Debit Card Grid||Second Factor: OTP and/or Transaction Password/Debit Card Grid||Second Factor: A user selected 4 or 6-digit M-PIN;no more waiting for OTP or fetching your Debit Card for grid values!|
|Per transaction limit||Rs 10 lakhs||Rs 10,000 using MMID and mobile Number;higher for transfers using IFS Code & Account number||Currently Rs 1 lakh|
All the major public and private sector banks in India has released their UPI based payments app. You can download their apps from Google Playstore and Apple iStore. Apart from the banks, digital wallets like Paytm has also integrated UPI features into their digital wallet apps.