India is on the way to become a cashless economy, and the Government is introducing various reforms to boost the process. The latest among them is UPI.
UPI (Unified Payment Interface) lets you pay for goods and services from wherever you are whenever you need. All you need is a smartphone. Here, your phone acts as your debit card.
NPCI (National Payment Corporation of India) introduced UPI in 2005. Almost all financial institutions, however, refused to adopt this and it remained with just a few national banks. But it gained immense popularity as time passed by. At present, almost every bank has its own version of UPI.
What is UPI?
UPI is an advanced version of IMPS (Immediate Payment Service) from NPCI which can also be identified as your financial address. Just like your bank accounts, this UPI remains unique to every single individual and helps you transfer and receive funds with ease and speed. The best part about this is that you can actually transfer funds any time of the day, any day of the week as it is not dependant on bank holidays or specific work hours like bank transfer facilities such as NEFT, RTGS, etc. It combines all your banking facilities and features into a single package. All you require for a successful transaction are a PIN and the UPI ID.
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 being used for it. For instance, if you use Paytm, your UPI ID will look something like “95xxxxxx@paytm. To be able to avail 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/or 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 him/her 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 too is increased; from Rs. 100000 to Rs. 200000
- Utmost security
When scanning the QR code, UPI now lets you verify the authenticity of your choice 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).
Following factors set UPI above other payment gateways:
Other payment interfaces
Allows free transfer of money
Charges up to 5% for every transaction
Ideal for small transactions
|Generally avoided them because of the high cost|
Secures your bank account; all it requires is a PIN number.
You have to type in the entire information, including account number, IFSC Code.
Safer means of money transfer
Generally avoided cashless transactions due to security concerns.
Transfer of money, fast and simple
Takes up to 24 hours.
One app for all your bank accounts
Every account requires a separate app.
You don’t lose interest; with no middleman, the entire money gets transferred to the recipient’s account.
You lose interest depending on the app you choose.
Registration for UPI:
Registering for UPI is a breeze –
- Download the BHIM app.
- Create your profile with the details required.
- Link your bank account with your virtual financial identifier; done.
Generating the MPIN for your UPI
- Choose a bank account from where you want to conduct transactions.
- The bank sends an OTP to the registered phone number.
- Enter the last 6 digits of your debit/credit card and expiry date.
- Key in your OTP and the numeric MPIN you want to have.
- Click “submit.”
- You receive a notification “success or decline.”
- Choose “success.”
You can also use your credit card for the purpose.
Paying your bills with your UPI:
Paying bills has never been easier than when done via the UPI facility. Whether it is your utility bills, cell phone bills, grocery bills, and practically just about anything under the sun, you can do so by following these simple steps;
- Log in to BHIM or any other app with your UPI.
- Choose the “bill pay” section.
- Go to the “biller category” Choose your service; electricity, telephone, etc.
- Choose your biller and give your consumer details.
- Click the “pay now” option.
- Key in your UPI PIN.
How to Request money using UPI
You can refer through the following mentioned steps to be able to request money using UPI.
- Choose the “collect money” section in your UPI-supported app.
- Key in the payer’s financial address.
- Type in the amount.
- Choose the time you want to be paid.
- Click “confirm.”
- 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.
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