Everything You Need To Know About UPI (Unified Payment Interface).
Ever since Prime Minister Narendra Modi demonetized Rs 500 and 1,000 notes, services such as digital wallets have become quite popular; Paytm is at the top of the list. But wait, there’s a new kid in town too – UPI, short for Unified Payment Interface. So what is UPI, how does it work, and how can it be a game changer? Well, let’s find out.
The day before yesterday, the State Bank of India launched its first UPI application; which they believe will be a game changer in the current economic scenario of demonetization, and we agree with them. SBI has the largest client base in India and by joining forces with 30 other Indian banks, UPI could change the way we do banking in India.
This is a carefully crafted article, and once you get to the end, you have a crystal clear idea of â€‹â€‹what UPI can and cannot do. So please read it carefully and let’s go.
So, what exactly is UPI?
In simple words, UPI (short for Unified Payments Interface) is an online payment system that allows you to transfer money to your friend (or anyone) using your smartphone. Now I know what you are thinking, you can also transfer funds from your smartphone using online banking and Paytm, right? So how is UPI different?
If you are transferring money through online banking (for example, NEFT or IMPS), you need to know the recipient’s account number and IFS code. Don’t forget that adding a new recipient and transferring funds also takes some time.
Paytm, on the other hand, is simple. Enter the person’s mobile phone number and the funds will be transferred instantly. No need to wait or enter complicated account numbers. But the big problem is that the money received from Paytm goes to your Patym wallet, not your bank account. Yes, you can transfer this money from your Paytm wallet to your bank account, but it takes time and a huge transaction fee (usually 4%, but now it is 1%).
This is where UPI enters the scene. With UPI, you can transfer funds knowing the recipient’s mobile phone number or VPA, and the amount goes directly from your bank account to your friend’s bank account. No third party wallet involved. The best of both worlds.
How does UPI work?
Here’s how it works: you download the UPI app for the App Store open it enter the recipient’s VPA (virtual billing address, which is similar to your bank account email address) confirm the amount click submit. And it’s all. You have successfully transferred money to this person’s bank account.
So, you see, in order to send and receive money via UPI, you don’t need any additional bank account information like IMPS, RTGS, etc. UPI can also be used to pay merchants who accept UPI as a payment method, just like you can with mobile wallets like Paytm. And yes, UPI is backed by the Government of India, that is, NPCI (National Payment Corporation of India).
What are the advantages of UPI over NEFT, IMPS, and RTGS?
Unlike OIL and RTGS, UPI works around the clock. You can make deals even on holidays or at 3 am when your little brother asks you for urgent cash.
With UPI, you can easily pay merchants (who obviously accept it) straight from your bank account without having to enter your card details, network bank ID / password, etc.
There is also no need to add a recipient every time you want to send money to a new person. All you need is their VPA (which is easy to remember) and you are ready to go.
What are the advantages of UPI over mobile wallets like Paytm?
Unlike online wallets, with UPI, your money is in your bank account. And you get interest for it while it is there, which is not in the online wallet.
UPI also has better security. You don’t need to worry about the security of your UPI account in the event of a hack as it uses two-factor authentication. So, without your mobile number or MPIN, the data is useless for a hacker. It cannot be accessed from any website like other e-wallets.
Funding your UPI wallet is also not a problem as it is directly linked to your bank account and all funds are always available.
In addition, there is no monthly transaction limit which is set at Â£ 20,000 for wallets like Paytm (KYC is increasing this limit).
Can I download any bank UPI app to use?
Yes. There are many applications for accessing UPI and any of them can be used for transactions using UPI. For example, you can use the ICICI Bank Pockets application to transact with your SBI account.
Here are some apps from popular banks:
ICICI – Pockets
HDFC – HDFC Bank MobileBanking
SBI – SBI Pay
Axis Bank – Axis Pay
Note. Make sure you update the app from the Play Store.
How do I start using UPI?
There are several requirements for using UPI such as –
1. An Android smartphone with an active Internet connection.
2. A debit card associated with this bank account.
3. Mobile phone number linked to the above bank account. One SMS will be sent from your mobile phone, so make sure you have enough credit on your balance.
Note. None of the UPI apps work on rooted Android phones for security reasons.
Once all of these requirements are met, you can begin.
First, you need to create your unique VPA (virtual billing address).
In this case, we will see how to create VPA in ICICI Pockets app (ICICI bank mobile app) using SBI account. But the steps should be similar for other banking applications.
Step 1: Open the ICICI pockets. The first time you open the application, you will need to install MPIN. Also, an SMS will be sent from your mobile phone for verification.
Step 2. Click â€œContinueâ€ to create a unique virtual billing address (VPA).
Step 3. Select VPA and check if it is available.
Step 4: Select your bank from the list.
Step 5: Then register this bank account using your debit / credit card details.
Step 6: Select the default account for transactions.
Step 8: After sending everything will be ready and now you can start transactions using UPI.
What transactions can I make via UPI?
Transactions are currently limited to transfers between different bank accounts in the form of VPA to VPA transfers. But there will be more in the future as UPI’s penetration into India deepens.
Can you link more than one bank account to VPA?
Yes you can. You need to select an existing VPA when linking a new bank account. If you choose to link another account with VPA, you will also need to select one specific account to use by default for sending and receiving payments.
Is there a transaction limit for UPI?
Yes, now the transaction limit is set at â‚¹ 100,000. This limit is calculated on a per transaction basis, so you can perform multiple transactions per day if needed.
Are there any fees for transactions made via UPI?
No, there are currently no fees for transactions made via UPI, but there may be fees in the future as NCPI originally announced that they would charge a flat rate of Â£ 0.50 per transaction.
Again, this is much less than the NEFT / IMPS fee (usually Rs 5.75) and getting money from the Paytm wallet to a bank account (usually 4% of the total for non-VIP users).
What are the security protocols that are taken care of?
Nandan Nilekani, an NPCI advisor, said the security the UPI uses is robust and transactions will take place in a highly encrypted format. The same technology is used by the IMPS NPCI network, which already processes more than RUR 8,000 per day in transactions, a figure that will only increase with the popularity of UPI.
Is my money at risk if I lose my mobile phone?
No, all accounts are configured to comply with RBI two-factor authentication rules, so without access to your MPIN, your account is completely protected from attackers.
Can money be transferred abroad using UPI?
No, at the moment only internal operations are allowed.
Is there an iOS or Windows Phone app to use UPI?
No, but according to the National Payment Corporation of India (NPCI), it will be available on other platforms soon. At the moment, it is only available to Android users as Android has the largest market share in India.
UPI is the way forward for the Indian economy as there is now a shortage of cash and also because it is the best alternative to other e-wallets like Paytm, Mobikwik, Oxigen wallet, etc. It will prove to be very beneficial to society over time because it will make payments quick and easy for the more than a billion people in the world’s largest democracy, India.
I hope this article helped you clear up some doubts about UPI. If you have any questions regarding UPI, feel free to ask in the comments or tweet me directly.
Also Read: ATM Money Transfer Guide for Indian Banks [Investigated]