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UPI

Unified Payment Interface

Last Updated 31st Oct 2020

  • UPI stands for Unified Payment Interface. It was launched by NPCI in January 2016 to facilitate retail payment on a real-time basis and bring various payment platforms on a unified interface.
  • Since its launch, UPI has been accepted and integrated by many payment apps like Paytm, PhonePe, Google Tez, SBI Pay, Airtel Payments Bank, etc.
  • UPI provides the facility of transferring funds 24X7 without the requirement of details like bank account number, IFSC code, etc.
  • Along with making payment, you can also request money by entering the payee’s Virtual Payment Address (VPA) or selecting it from an existing list.
  • To use UPI, you must create your profile, link your bank account and generate 6 digit mPIN or UPI PIN.
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What is UPI?

The Indian government launched UPI or Unified Payments Interface in January 2016 as a major step towards moving the Indian economy to a digital economy. It facilitates the transfer of funds from one bank account to another without the need of account number and IFSC code. It is a system of transferring funds in real-time. A user can send money and also make a ‘collect request. The transactions are made through a virtual address which is known as Virtual Payment Address (VPA).

In other words, UPI facilitates the transfer of funds from mobile in real-time through VPA, which is unique for each user.

UPI

Who Initiated UPI?

The National Payments Corporation of India launched UPI. NPCI is a unified organization for retail payments across the country. It was created jointly by the Reserve Bank of India and Indian Banks Association. The Board for Regulation and Supervision of Payment and Settlement System was set up by the RBI in 2005. It was in this organization’s vision document a proposal was put forward for incorporating Retail Payment System across the country. The aim was to bring different payment systems across the country in uniformity, along with practicing good business standards for retail payments.

How does UPI Work?

With the help of UPI, you can transfer funds digitally without the need of bank account number, name and IFSC code. To set up your UPI account, all you need are:

  • A smartphone
  • A bank account
  • An active mobile number which is registered with your bank account.
  • Internet connection

Once you have these things, you need to download a UPI app and register by linking your bank account with the app and then generating an mPIN.

After the registration and generation of mPIN are complete, you are all set to use UPI. It facilitates the transfer of money from the sender’s bank account to the receiver’s bank account without the exchange of information like bank account number, IFSC code, etc. You can use UPI in the following ways:

  • You can use the Virtual Payment Address (VPA) to transfer funds.
  • You can also scan the QR code and then send money.

UPI is a completely secure mode of payment, and you can link multiple bank accounts as well.

Features of UPI

  • You can make online payments for various merchant services and shopkeepers, whether in case of online shopping or retail shopping.
  • You can also set it as default payment for making payments in various utility apps.
  • You can transfer friends from one account of yours to another.
  • You can also use the app to request money from others.

How to Register for UPI App?

Follow these steps to register for the UPI app:

  • You need to first download a UPI application from your app store.
  • After you have downloaded the app, open it and create your profile by entering the necessary details like name, registered mobile number, virtual payment id, password.
  • In the next step, you need to link your bank account by clicking on Add or Link or Manage Bank Account.
  • Lastly, you have to generate mPIN to start using UPI for which you have to follow these steps:
    • Firstly choose the bank account from which you want to pay using UPI.
    • Click on Generate mPIN to receive OTP on your registered mobile number with your bank account.
    • After that, you will be required to enter the last 6 digits of your debit card and its expiry date.
    • Next, enter the 6 digit mPIN of your choice and click on the ‘Submit’ button.

How to Make UPI Money Transfer?

You can make UPI money transfer by following these steps:

  • Open the UPI based app in which you have linked your bank account set up mPIN.
  • Next, select the ‘Transfer/Send Money’ option in the app.
  • In the next step, you can either scan the QR code or enter the beneficiary’s registered mobile number or Virtual Payment Address.
  • After that, you have to confirm that you want to pay and then enter your 6 digit UPI mPIN.
  • Money is transferred instantly after you confirm the payment by entering your mPIN.

How to Request money for United Payment Interface?

Requesting money is not too complicated from UPI apps either. The steps for it are:

  • Open the UPI based app in your smartphone.
  • Next, select the ‘Request Money’ option on the app.
  • Enter the VPA of the payee or select the payee from the existing list.
  • Now, enter your mPIN, and your request will be sent directly to the payee.

UPI Bill Payment

  • Open the UPI based app in your smartphone and select the option of ‘Bill Payment’.
  • In the next step, you have to add the biller to whom you need to make payment.
  • After selecting the biller, enter the amount and follow it up by entering your mPIN.
  • After you confirm the mPIN, the transaction will be processed, and payment will be credited instantly to the biller.

Benefits of Using UPI

  • You can use the facility anytime from anywhere if you have an internet connection.
  • The UPI is easy to use, and transfer of funds happens instantly.
  • You can easily manage all your bank accounts through a single app.
  • Transactions are authenticated through mPIN, which makes the payment process easier and quicker.
  • The interface is highly secured, and all personal information is protected.
  • The system of VPA ensures there is no need for sharing any personal information.
  • The process of requesting money is as easy as making payment.
  • In addition, merchants are able to collect funds instantly without sharing account details.
  • There is no additional cost attached as opposed to a POS machine.
  • In fact, the COD has also become much easier and cashless due to UPI payments.

UPI Transaction Limit & Charges

  • Some of the top banks in the country have a total transaction limit in a day and top ceiling of one transaction through UPI to be ₹ 1 Lakh.
  • Most banks allow a maximum of 20 transactions in a day through UPI.
  • If you are using BHIM app for UPI payments, then the per transaction limit is ₹ 10,000 and the daily limit is ₹ 20,000 .
  • Transaction limits vary from bank to bank, and it may also be changed from time to time.
  • Currently, UPI has tied up with more than 40 banks to make funds transfer easy and available 24X7.

Banks Offering the UPI Facility

  • Axis Bank
  • Bank of Maharashtra
  • Bhartiya Mahila Bank
  • Canara Bank
  • Catholic Syrian Bank
  • Union Bank of India
  • Punjab National Bank
  • South Indian Bank
  • Yes Bank
  • DCB Bank
  • Federal Bank
  • ICICI Bank
  • TJSB Sahakari Bank
  • Karnataka Bank
  • UCO Bank
  • State Bank of India
  • HDFC Bank
  • Bank of Baroda

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FAQs

What is UPI in banking?

UPI is a real-time payment system which facilitates the transfer of funds from one bank account to another through a Virtual Payment Address.

How does UPI work?

Through UPI, a person can transfer funds via a payment app which is integrated with the UPI system. The transfer of funds can be done 24X7 on a real-time basis.

How do I get a UPI ID?

You can get the UPI ID by registering yourself, linking your bank account and generating the mPIN.

How do I send money through UPI?

You can send money through UPI by opening the mobile app on which you have set up UPI payment. After that choose the option of money transfer, select the payee or scan QR code, enter the amount and follow it up by entering your mPIN, then confirm. The money will now be sent.

How do I activate my UPI?

To activate your UPI you have to create your profile, link your bank account and then generate your mPIN.

Are UPI and Google pay the same?

UPI is the payment interface launched by NPCI, while Google Pay is a payment app which supports the transactions done through UPI.

Which apps use UPI?

Some popular apps which use UPI are PhonePe, Paytm, Google Tez, Airtel Payments Bank, Mobikwik, SBI Pay, etc.


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