The full form of UPI is the Unified Payments Interface. Unified Payments Interface (UPI) is a framework that puts numerous bank accounts into a single mobile application (of any participating bank), consolidating banking features, consistent fund transfer and merchant payments through one application. It also serves the peer to peer transfer request, which can be planned and paid according to necessity and convenience.
How does it work?
With UPI, transferring money to someone is a breeze. You don’t have to remember the recipient’s account number or any such information. You need only their Aadhar number or phone number registered with a bank. You may set up a UPI ID with any app that supports it. Generally, a UPI ID starts with a mobile number and ends with the app used for it. For instance, if you use Paytm, your UPI ID will look something like “95xxxxxx@paytm“. To be able to avail of this facility, you will need the following mentioned assets;
- A smartphone
- An active bank account
- Netbanking facilities activated with the bank account
- An active cell phone number that is linked to your bank account
- A good internet connection and data plan.
Once the above assets are achieved, the next thing on the agenda is to set up your UPI ID. For that, you will need to follow the below-mentioned steps:
- Choose an app that works fine on your phone.
- Give your bank account information.
- Type in the OTP the app sends to your device. This is a step to ensure that you are not a robot.
- Enter a PIN to secure your ID.
- Choose any contact from your list.
- Send or receive money from that contact.
UPI essentially transfers money from the sender’s account to the receiver’s account without disclosing any bank details for either of the party. This is a safe mode of making transactions, and one can do so at any time of the day. UPI’s typically work in three ways;
- By scanning the QR code which is displayed on your screen
- Adding the receiver’s account number and IFSC code
- By entering the UPI ID of the sender or receiver, respectively.
Features of UPI
NPCI updates UPI as per the demands of time. And version 2.0 offers the following features:
- One-time mandate
The feature lets you authorize a transaction and do it at a later date. This becomes possible with a one-time lock facility. You will have to make a one-time commitment to process your transaction at a later date. Merchants and individual users will benefit a lot from this facility. The transaction is fast, and the deduction happens automatically.
- Verification of the invoice
The app dispatches an invoice to the customer online. This lets them inspect the order and other details that need verification. Afterwards, the customer can allow the direct transfer of money to the merchant.
- The facility to add your overdraft account
Until recently, users were able to link only their current and savings account to their UPI ID. At present, they can access their overdraft accounts and set up an automatic payment mechanism. The limit of the transaction to is increased; from Rs. 100000 to Rs. 200000
- Utmost security
When scanning the QR code, UPI now lets you verify the authenticity of your chosen merchant. The customer receives a notification if the merchant is an unauthorized dealer. It also is the safest means of payment. Here, you don’t share your card details. All you key in the app is your PIN (Personal Identification Number).
UPI Stakeholders:
A transaction through UPI involves the following parties:
- Payer PSP(payment system player)
- Payee PSP
- Remitter Bank
- Beneficiary Bank
- National payment corporation of India
- Bank account holder
- Merchants
How to Register for 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.
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 four digits UPI Pin which will be required for making all transactions.
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How to Make a UPI Transaction?
Transfer 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 “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 of 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.
How to Find UPI ID?
To find a UPI ID, you need to follow the steps mentioned below:
- Go to Google Play App
- Tap on your photo in the top right section
- Tap on the bank account
- Tap the bank account whose UPI ID you want to view
- You will find the associated UPI ID under the ‘Manage UPI IDs’ section.
How to Reset UPI PIN?
In case you forgot UPI PIN, follow the steps mentioned below to reset UPI PIN:
- Go to Google Play App
- Tap on your photo in the top right section
- Tap on the bank account under payment methods
- Tap on the bank account you want to edit
- Tap on the ‘Forgot UPI PIN’ option
- Enter the last six digits of your debit card and the expiry date (MM/YY)
- You can create a new UPI ID.
- An SMS will be sent to your registered number for OTP authentication.
Security of the UPI App
The app is highly encrypted and has the bandwidth to carry on various transactions at the same time. At present, it handles as much as ₹ 8,000 Crore equivalent transactions daily. Just as debit card transactions are secured with an OTP, a UPI app is secured with an MPIN. The transaction is secured with a 4-digit UPI Pin.
UPI charges
- UPI does not impose any charge on consumers. Even banks that use the app don’t ask for it.
- At present, UPI is not considered an effective alternative for cash or credit card. NPCI is adding more and more features to it from time to time.
Is UPI Better than Cash or Cards?
The whole concept of launching this app was to ensure that India moves towards a cashless economy. Since its launch, it has been a huge hit amongst all the user’s thanks to its convenience. Though it cannot replace cards and cash immediately, it can move in that direction with time and added features. 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.
UPI Benefits to the Ecosystem
Benefits to Banks
- Single click two-step authentication process.
- Universal application for transactions.
- It is safe, secure and innovative.
- Unique identifier for payments.
- Seamless merchant transactions
Benefits to Customers
- 24*7 availability.
- Single mobile application for accessing numerous bank accounts.
- No credential sharing is required as UPI uses a virtual address.
- Single-click application
- Customers can raise a concern through the inbuilt transaction failure feature.
Benefits to Merchants
- Seamless fund collection from customers through a single virtual address.
- No need for storing customers identities, i.e. virtual addresses.
- Access to customers not having credit or debit cards.
- Suitable for e-commerce and m-commerce businesses.
- Resolves the issue of having to round off payments as an exact amount can be paid through digital mode.
- In-app feature of payments to vendors and customers.
Important Things to Know about UPI
We refer to UPI as a smartphone-friendly application. Here are some interesting things that you should know about this payment interface that gives it an edge over others
- In this payment gateway, 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.
- Just as you send an SMS, you can now send or receive money from one account to another.
- You can avail the benefits of this app all-round the day, even when RBI is closed.
- 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. Many of the banks have their internal caps also.
A Quick FAQ to UPI
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What is the full form of UPI?
UPI full form stands for Unified Payments Interface.
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What is my UPI ID?
A UPI ID is your address through which one can transfer funds to you or request the same. It is just like your email ID and is accompanied by an mPIN (like a password).
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What is VPA in UPI?
A Virtual Payment Address (VPA) refers to a unique identifier to help UPI in tracking a person’s account. It basically acts as an ID independent of your bank account number and other details.
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What is UPI PIN or mPIN?
mPIN is a password containing 4-6 digits that are required to send money via UPI. It works the same way an ATM PIN works.
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Is UPI free?
Currently, UPI is a free mode of the bank to bank fund transfers. However, in the coming times, transactions may become chargeable. But it is expected to fall within 50 paisa per transaction which is quite reasonable.
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Are UPI and BHIM the same things?
No. UPI is a platform that facilitates the transfer of funds from bank to bank whereas BHIM is a mobile app developed by NPCI. The common link between these two terms is that both are developed by the same entity of NPCI (National Payments Corporation of India).
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What if I enter the wrong PIN number?
The transaction will fail. And the money will not be deducted from the account.
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How to pay for my online purchases with UPI?
When paying online, you will see UPI as an option. Click and follow the instructions that appear on the screen.
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I can’t find my account in the app. What should I do?
Make sure that you have registered the same number for both the account and your virtual financial address. If this is done right, the account will definitely be registered. In case you have forgotten your password, you can reset it by clicking the ‘forgotten password’ tab and then following the steps sent to your registered email address.
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I see that money has been debited from my account. But I don’t get any confirmation. How to confirm?
You should receive a “success” notification upon completing the transaction. The app also sends an SMS to the registered mobile number. Sometimes, due to technical issues, it takes time to reflect. However, if you don’t receive any within 24 hours, contact your bank’s helpdesk.
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In case I do not have a smartphone, can I still avail this facility?
Unfortunately, this facility is only available on smartphones. There are some applications that can also be done through the laptop but the idea of a UPI is to provide extreme convenience to make and receive payment even when on the go, hence a smartphone is necessary.
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Who regulates UPI?
UPI is developed and regulated by NPCI (National Payments Corporation of India) which in turn is regulated by the Reserve Bank of India.
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Is there an upper limit as to how much I can transfer in one transaction?
Currently, the upper limit of making transactions is capped at Rs. 1,00,000/-. However, this is under revision and might be increased soon. Many internal banks set their own capping limits so this amount can vary.
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In case I have an emergency payment to be made in the middle of the night, can I do so or would I have to wait for the money to be transferred during working hours?
The greatest part about a UPI is that you can make payments at any given time of the day throughout the week at per your convenience. The receiver receives the money almost immediately and can withdraw it or make due payments as required.