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.

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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.

How Does UPI Work

The user will only have to use a virtual address, known as a Virtual Payment Address (VPA) to carry out any transaction. UPI has been developed by the National Payments Corporation of India (NPCI) and is regulated by the Reserve Bank of India (RBI). UPI is slowly becoming the most preferred form of digital payment. The below-mentioned things are required to transfer funds via UPI:

  • A smartphone
  • An active bank account
  • The mobile number must be active and linked to the bank account
  • Internet connection
UPI - Unified Payments Interface

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.

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 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.

Check IFSC Code for Top Banks:

Banks Which Offer The UPI Facility

The main banks that offer the UPI facility are given below:

  1. Airtel Payments Bank
  2. Andhra Bank
  3. Bank of Baroda
  4. Allahabad Bank
  5. Bank of India
  6. Canara Bank
  7. City Union Bank

  1. DBS Digibank
  2. Federal Bank
  3. HDFC Bank
  4. HSBC
  5. Indian Bank
  6. ICICI Bank

  1. IndusInd Bank
  2. State Bank of India
  3. Kotak Mahindra Bank
  4. Union Bank of India
  5. Paytm Payments Bank
  6. YES Bank
  7. Punjab Nation Bank

Apps with UPI Feature in India

Below is the list of App that provides UPI Feature:

  1. PhonePe
  2. Paytm
  3. BHIM app
  4. MobiKwik
  5. Google Tez
  6. Uber
  7. Chillr
  8. Paytm Payments Bank
  9. SBI Pay
  10. iMobile
  11. Axis Pay
  12. BOB UPI

The entire list of banks that offer the UPI facility can be found on https://www.npci.org.in/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.

FAQ's on UPI (Unified Payments Interface)

  1. Is it necessary to download the UPI app of your bank?

    Ans: No. Users can download any UPI app. Also, it can be your bank app or another bank’s.

  2. What should a user do if the UPI transaction fails but the money is debited from the customer’s bank account?

    Ans: 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.

  3. Money has been debited from my account even though the transaction is still pending? What should I do?

    Ans: 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.

  4. Is it possible to have more than 1 UPI app on the same smartphone and link them to separate bank accounts?

    Ans: Yes. You can link more than one UPI same to the same bank account number or a different bank account number.

  5. What are the mobile platforms that UPI can be used on?

    Ans: UPI can be used on Android and iOS platforms.

  6. In case I want to register a complaint, how do I do that?

    Ans: A complaint can be made on the UPI app itself.

  7. I entered a wrong UPI PIN, what will be the consequences?

    Ans: If a user enters a wrong UPI PIN, the transaction will fail.

  8. What should I do if my bank name is not detected in the UPI app?

    Ans: 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.

  9. Is it possible to pay merchants through UPI?

    Ans: Yes. Payments can be made online on e-commerce sites if the UPI option is available.

  10. Can money transfer be made on bank holidays?

    Ans: Yes.

Other UPI Related Article

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News Related to Unified Payments Interface (UPI)

  • UPI set to launch NFC-based payments: to pose a challenge to Mastercard and Visa

    The National Payments Corp. of India operates the Unified Payments Interface and they now have plans to add NFC capabilities (near-field communication) to the payments infrastructure. They are now in talks with payment aggregators for pushing this product across point-of-sale (PoS) devices.

    This new move has been expected to expand UPI’s reach to all the offline merchants. This will be done by tapping the PoS ecosystem and also trigger more peer-to-merchant transactions.

    The NFC capability will now allow the UPI to take on the rival private payments networks like Mastercard and Visa. They have also been expanding their contactless payments network.

    21 August 2020

  • Use UPI to withdraw cash at shops

    All the shops that have now partnered with banks will be able to provide cash withdrawal facilities to customers via UPI (Unified Payments Interface). This move will in turn reduce the need for people to line up at ATMs and bank branches. The limit for withdrawal is Rs.2,000 per day per card in all Tier III-VI areas. In in Tier I areas, the limit is Rs.1,000. All charges cannot be more than 1% of the transaction amount.

    The RBI had allowed cash withdrawal at Point of Sale (PoS) terminals by the use of debit cards and also open system prepaid cards. The RBI had said that cash can be withdrawn at PoS terminals via Unified Payments Interface (UPI) with the use of electronic cards which are linked with overdraft facility with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts. The banking regulator had said that credit cards are not allowed for cash withdrawal at PoS terminals.

    8 May 2020

  • UPI 2.0 Features Fail to Meet Expectations of Industry Experts

    As per a report, the launch of the upgraded version of Unified Payments System (UPI), dubbed as UPI 2.0 might get delayed as some of the new features have not been developed well enough. The National Payments Corporation of India (NPCI) which demonstrated the new features to industry experts were expecting to launch the updated version in the month of July. The updated version comes with a variety of anticipated features like peer-to-peer payments, sending an invoice to the customer after making a purchase, making secure QR code payments, and promote merchant transactions. The daily transaction limit on UPI 2.0 is also doubled up to Rs 2,00,000.

    A person familiar with the demonstration has informed that the feature which enables automatic payments for bills and loans at specific intervals would not be part of the new update and would be rolled out later. Apart from that, the amount blocking functionality which allows users to block a certain amount of money in the bank account for future bookings is expected to come with some trade-offs. It needs to be mentioned that the umbrella organization for all retail payment systems in the country is expected to launch a beta version of UPI 2.0 at first. The beta version would carry support from only eight to ten banks that operate in the country. Based on the response received, the organization would update the features and roll out the service.

    24 July 2018

  • UPI Transactions See a Surge in April

    The number of Unified Payment Interface (UPI) transactions has been on a surge on the recent months both in terms of value and the total transaction numbers. When compared to the month of March, the total transaction value in April has seen a rise by 7% overall. This data has been obtained from the National Payments Corporation of India (NPCI).

    As far as the total number of transactions are concerned, the number was 27 times more for the month of April, when compared to the same month in the previous year 2017. On the whole, the increase in number was by around 12%, standing at a whopping Rs.27,021.0 crore for the month of March in 2018. The total amount transacted for the month of April in 2018 was 12 times more when compared to the same month in the previous year. UPI is a type of payment method using which there is no need to add a beneficiary or provide details such as account number or IFSC code. All payments can be made using a single ID, which is usually referred to as Virtual Payment Address (VPA). Transfers can be made at any time and from anywhere and there is no need for a remitter to know the IFSC code of the payee in question.

    21 May 2018

  • UPI Transactions Up by Over 1000 Percent During 2017-18 Financial Year

    The central government’s initiative of having a seamless digital payments platform for transactions received a big boost as Unified Payment Interface (UPI) witnessed a huge growth in the last financial year. As of March this year, the total transaction value of payments made through UPI was Rs.24,173 crore as compared to Rs.2,271 crore in April 2017 which shows that the increase witnessed was 1,064%.

    Meanwhile, the figures for the month of March with regard to the total number of transactions was 17.8 crore. It saw an increase of 3.73% as compared to the previous month. The value of transactions rose by 26.38% during the same time period. It needs to be mentioned that the growth witnessed in UPI based transactions to apps like BHIM, Tez, Paytm, PhonePe as well as to e-banking apps. Given the surge witnessed, the government is hopeful that UPI adoption will reach the target of 10 crore users by the year 2020 with the help of the existing platforms and new entrants like Whatsapp.

    7 May 2018

  • Hope for 100 Million UPI User Mark: NPCI

    The National Payments Corporation of India wants to increase the UPI user mark to 100 million in the next two years. The focus was on increasing the peer-to-peer payment ecosystem in the UPI system but from henceforth the aim of the platform will be to expand the person-to-merchant space in India in the coming days.

    7 May 2018

  • People Go Digital as ATMs Dry Up in Dehradun

    People in and around Dehradun are going digital as ATMs there have been dry for a brief period. With this scenario in place, shopkeepers who have online payment modes are gaining a number of benefits.

    Those in need of cash for daily purchases are taking the digital route. According to shopkeepers, many people have been asking if there are digital payment modes and if they accept payments through Paytm and the like.

    People are also taking up the Unified Interface Payments (UPI) system to make payments. Many people in the city have been adopting to this mode. People are happy that payments can be made in a simple, hassle-free and easy manner without the need to furnish bank account details or IFSC code.

    A resident of the city said that UPI has made things much easier and that money can be both sent and received without the need for a specialised app or cumbersome money transfer process using all payee details. With UPI, there is no need to register a beneficiary and payments can be made using what is known as a Virtual Payment Address (VPA) at all times.

    23 April 2018

  • UPI Usage Surges as Debit, Credit Payments Decline

    It has come to light that the number of debit and credit card transactions have come down when compared to the number UPI transactions in the country, according to a recent report.

    While there has been an unprecedented growth rate as far as UPI is concerned since its inception in 2016, card-based payments have grown only by 20%. It has been predicted that this growth rate is because of the various benefits offered by UPI such as cashbacks and discounts.

    The drawback as far as cards are concerned is the lack of cashback and other schemes, and they also come with a certain transaction fee, which is a downside.

    The digital payment environment has grown immensely in the country and there are also several apps in the market that support this payment method. It seems like card-based payments are slowly losing their charm. There have been quite a few developments as far as physical cards are concerned too in order to keep up with the competition. An example of this is the coming up of contactless cards in the digital payment ecosystem.

    Many global brands are also taking up to UPI and examples of this include Google Tez, Amazon, Uber, and even WhatsApp.

    3 April 2018

  • UPI-Based Payments are Giving a Tough Competition to Visa and Mastercard

    Unified Payments Interface (UPI) based transactions has seen a surge since 2016. As a result, global debit and credit card companies like Mastercard Inc. and Visa Inc. are losing their market share in India. The latest data from the Reserve Bank of India (RBI) has revealed that in February 2018, UPI-based transactions reached almost 50% of the value of debit and credit cards swiped at stores.

    According to a December 2017 report from the Fidelity National Information Services, adoption rates of UPI payments has been remarkable since the introduction of UPI in August 2016. This has led to the creation of a wealth of new innovative payment solutions in the country. The US-based firm further stated that UPI- based transactions has increased 100 times to 9.2 million from just 92,000 in the first nine months of operation. Meanwhile, payments via debit and credit cards saw a decline from 271.1 million in January to 247.1 million in February.

    The UPI-based payments has been adopted by several major players like WhatsApp, Amazon, BigBazaar and others. According to the report, the digital payments market in India will show a five-fold increase and hit $1 trillion by 2023. Currently, the market is worth around $200 billion

    28 March 2018

  • 171.4 Million UPI Transactions in Feb

    THe number of UPI transactions have surged in the month of February to 171.4 million, while the total number of transactions made through the interface was 19, 126. On the other hand, BHIM transactions for the same month stood at a value of Rs.4,011 crore, while the total number of transactions went up to 9.9 million.

    26 March 2018

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