Unified Payments Interface

The following is a brief introduction to the topic:

Unified Payments Interface, or UPI for short, is a new real-time payments system that was developed by National Payments Corporation of India. UPI was launched in April 2016 to create a smooth and instant experience for interbank payments. This article will explore the various aspects of UPI and its impact on India’s financial landscape.

UPI Features

• Real-Time Transactions: UPI allows for real-time transfers of money 24 hours a day, 7 days a week.
• Single Click Authentication: UPI provides users with the ability to verify their transaction by using their mobile phone.
• Multi-bank accounts: Multiple bank accounts can be connected to one UPI ID.
• Two-Factor Authentication: UPI offers secure transactions with two-factor identification using the registered mobile number as well as MPIN.
• Interoperability: UPI helps to facilitate interoperability between different applications and bank accounts.

How UPI Works

UPI’s operating mechanism can be broken into four steps.

1. Registration: The user must download an app that supports UPI, enter their mobile number and connect their accounts.
2. Create a UPI: Users can create an unique UPIID (user@bank, for example) that acts as their payment address.
3. Set MPIN For transaction approval, an MPIN (Mobile Personal Identity Number) has been set.
4. Paying for your Order: In order to make a payment the user must enter both the UPI number and the amount of the payment. The transaction is then authorized using the MPIN.

The Impact of the Financial Landscape in India

UPI, since its launch has been a huge influence on India’s entire financial industry:

• More digital transactions: UPI led to an increase in digital payment, which has helped to achieve the cashless economy.
• Financial Inclusion: UPI played an important role in providing services to unbanked, and underbanked population.
• E-Commerce Growth: UPI, with its seamless payments has fuelled the growth in e-commerce services and online sales.
• Reduce Transaction Costs UPI is interoperable, which has resulted in lower transaction fees for consumers as well as merchants.

Relevant Examples

• Google Pay Google Pay, one of the UPI enabled apps most widely used, allows users to easily pay their bills, make money requests, or request payment.
• PhonePe: PhonePe, another widely used UPI app that offers additional services, such as bill payment, recharges and more, is also available.
• Bhim UPI: BHIM is an official NPCI App, which was developed to promote UPI usage across India.
• Paytm: Paytm, originally an electronic wallet, has now integrated UPI for instantaneous and secure fund transfers.

The Frequently Asked Questions

1. What is the UPI code?

   UPI is a real time payments system created by NPCI. It allows seamless interbank transactions to be made using a smartphone.

2. How can I create a UPI?

   For a UPI, you can download an app that supports UPI, enter your mobile number and bank details, then set up your UPI (e.g. User@Bank).

3. UPI is free for use.

   UPI transactions do not usually cost anything for the user. There are some banks that charge small fees on certain transfers.

4. Is UPI secure?

   UPI has a high level of security, as it uses two-factor authentication. This includes both a mobile phone number and mpin. The entire transaction is encrypted.

5. How can I connect multiple bank accounts with one UPI ID?

   It is possible to link more than one bank account with an UPI ID. For each transaction, you will be able to select the appropriate account.

6. How much can I spend on UPI transactions?

   The transaction limit for UPI varies by bank but is generally capped at ₹1 lakh per transaction and ₹2 lakh per day for most banks.

7. What will happen if a transaction fails?

   If a transaction fails, it is refunded to you automatically in a matter of minutes or hours. Contact your bank for assistance if the problem persists.

8. How can I reset my MPIN code?

   To reset your MPIN, open your UPI app, go to the settings or bank account section, select ‘Change MPIN’ or ‘Reset MPIN,’ and follow the prompts.

9. UPI can be used worldwide?

   UPI was initially designed to be used in India. NPCI has been working hard to expand internationally.

10. How does UPI compare to other methods of payment?

    Its key advantages include real-time instant transactions, reduced transaction costs, simplicity, interoperability and increased security. This makes it superior to other methods such as NEFT and RTGS.