After the demonetization hullabaloo last year, India is slowly inching its way to a cashless economy and UPI is a buzzword that is resonating through the air. So what is UPI or Unified Payment Interface?
UPI is a payment system that allows money transfer between any two bank accounts via smartphone. The mechanism allows a customer to pay directly from a bank account to different merchants. These merchants can either be off-line or on-line. UPI does away with the hassle of typing credit card details, IFSC codes or net banking and wallet banking passwords. UPI merges a wide variety of banking features like seamless fund routing and merchant payments under an umbrella.
It also provides ‘Peer to Peer’ collect request that can be scheduled and paid as per requirement and convenience. Each bank provides its own UPI app for Android, Windows and iOS mobile platforms. So basically, your smartphone doubles up as a virtual debit card wherein you can send, receive or transfer money instantly.
Launched in January 2016, UPI is an initiative by the National Payments Corporation of India (NPCI). This organization is set up with the support of the Reserve Bank of India and the Indian Bank’s Association. The NPCI operates the Rupay payments infrastructure that allows different banks to connect and transfer funds. Another initiative of the organization is IMPS (Immediate Payment Service). UPI is a better version of IMPS.
Getting down to business, how does a UPI work?
Normally, to make an on-line bank payment, one has to enter their account details. Their account number, type, bank name and the IFSC code. This in itself is painful processes certain value will have to be typed in twice for authentication. Imagine doing the same over a phone. Moreover, most banks take up to 12 hours to add a new payee. Thankfully. This has reduced to 4-6 hours.
UPI as mentioned before, do away with all these. The interface allows account holders across banks to send and receive money from their smartphones using just their Aadhaar’s unique identity number, mobile phone number or virtual payments address without entering bank account details.
To initiate a transaction, one can use either of their two address. Global or Local. The global address includes the mobile number, Aadhaar card number, and the bank account number. A local address, on the other hand, can be a virtual address. Something that your bank gives you. Like a virtual ID similar to your email ID. This virtual address will allow you to send and receive money from multiple banks and prepaid payment issuers. Now you will longer be required to use a particular app to send and receive money.
Instances where you can use UPI.
For example, if you use a taxi service, at the end of the journey you just have to give your virtual address and the driver will request money from it. You will get a message on your mobile phone asking for authentication. Once you authenticate the transaction by entering your password, it will be complete. This process doesn’t require either the driver or you to share bank details. Since UPI runs on IMPS, the service will be available real time and 24X7. The Transaction limit for a day is 1lakh rupees.
Companies like Ola and Uber can take advantage of UPI. Not just taxi services, but Food ordering services like Zomato, Food Panda, and Big Basket can also leverage UPIs.
How Secure is UPI?
UPI transactions take place in a highly encrypted and foolproof format. 2 factor authentication will be in place wherein MPIN will be used instead of OTP. Moreover, UPI is a layer over IMPS and the IMPS network handles more than 8000 crores worth of transaction on a single day.
Let’s get started!
- Download the app from Play Store
- Install the app properly
- Set app login
- Create virtual address
- Add your bank account
- Set M-Pin
- Start transacting using UPI
The UPI app of the following banks are available in Google Play Store:
- Andhra Bank
- Axis Bank
- Bank of Maharashtra (BOM)
- Bhartiya Mahila Bank (BMB)
- Canara Bank
- Catholic Syrian Bank (CSB)
- DCB Bank
- Federal Bank
- ICICI Bank
- TJSB Sahakari Bank
- Oriental Bank of Commerce (OBC)
- Karnataka Bank
- UCO Bank
- Union Bank of India
- United Bank of India
- Punjab National Bank (PNB)
- South Indian Bank (SIB)
- Vijaya Bank
- YES Bank
Services offered by UPI
- Balance Enquiry
- Transaction History
- Send / Pay Money
- Virtual Address
- A/c no. & IFSC code
- Mobile no. and MMID
- Collect Money
- Virtual Address
- Add bank account
- Change / Set MPIN
- A/c Management
Best UPI apps in the market.
Shouldn’t come as surprise as this app has the cleanest interface of them all. Decluttering the home screen, there are only two options. One for sending money and the other for requesting. All the other options are hidden on the left side. They can be visible with a simple swipe. The app is secured by a digit password.
SBI Pay is the standalone UPI app of the State Bank of India. With a simple user interface, the app calls for amazing user experience. transactions take only about 3-4 steps. It has all major UPI services comprising send and request money, balance inquiry and set/change UPI PIN aka MPIN.
The official UPI app of Canara Bank. Apart from a great user interface, it allows you to set a profile picture. Unlike others, the app has some additional methods for sending money. It allows you to send money via virtual payment address and using mobile number, MMID and Aadhaar number. eMpower additionally, allows many accounts in the app at a time.
The list won’t be complete if PhonePe is not mentioned. This UPI app also doubles a mobile wallet. The fastest growing UPI app after BHIM, PhonePe’s interface is pretty looking. Working efficiently well in slow networks, PhonePe is available in 8 languages including English, Hindi, Marathi and Bengali. The app also has a QR scanner.
PNB UPI is developed and released by – no marks for guessing- the Punjab National Bank. Although the app does not feature rich, it gets the job done. So if you are looking for a plain and simple UPI to receive and request money, then PNB UPI is the one to go for.
But our winner is BHIM. Developed and released by NPCI, BHIM is perhaps the simplest and fastest UPI app available in the play store.
Here are a few of the features of the BHIM app:
1.Transfer money using only mobile number.
2.Transfer fund to a virtual payment address and bank account
3.Authenticate fund using fingerprint
4.Will work without the internet on feature phone
6.An extensive FAQ. A blessing for newbies.
7.Saved customer care numbers.
If this isn’t enough, after the latest updates, the app now;
1.Available in 9 different languages
2.Use Aadhaar card to transfer money
3.Block spam “Collect Requests”
Now the more pressing questions,
Will UPI bring Mobile Wallets to an end?
Not necessarily. The reason being that RBI has allowed only banks to become Payments service providers of UPI service. Why? Because banks were losing their ground to mobile wallets like Freecharge, PayTM and so on. Preferred mobile wallets like PayTM can still retain its customer base for quick recharges, movie tickets. They can further attract the crowd by offering cash back. Having said so, Mobile wallet companies will be in a pickle unless they find ingenious ways to survive.
How much do I have to pay to use UPI?
According to the NCPI, a user has to pay Rs. 0.50 per transaction. It will be shown as IMPS transaction on your bank statement.
In the long run, will UPI completely wipe out Cash and Cards?
The cash floating in the system is about 18% of the country’s gross domestic product. This makes making India as one of the most printed currency-dependent countries in the world. This means that the success of UPI depends on one crucial factor. Smartphones. This might seem absurd because who doesn’t have a smartphone nowadays right? After all, you can easily get a smartphone at 2000 rupees. But a closer look at the numbers will have you singing a different tune.
There are 760 million Aadhaar cards. 26 million Aadhaar numbers are added every month and soon the total Aadhaar card issuance will touch a billion by next year. Out of India’s 900 million mobile phones, only a meare120 million are smartphones.
So, even though the use of smartphones is increasing, its nowhere near the levels of Aadhaar registration.
All said and done, UPI is a great and major step towards a cashless Indian economy. Albeit the fact that a wide majority of Indians still look at technology with confusion and distrust, progress is slow but steady.