India has adopted many digital platforms over the last several years, and there have been measures aimed at turning the nation into a cashless economy. UPI is one recent digital innovation that was introduced in India. Unified Payments Interface, or UPI, is its short name. With this modern method of payment, customers may transfer money from anywhere at any time using their cellphones. A user’s smartphone may now function as a virtual debit card thanks to this technology. A few seconds can be spent to transfer and receive money with this software.
What is UPI?
When the UPI app was originally introduced in India in January 2016, only a small number of national banks used it. Most banks accepted UPI’s enormous benefits within a year, which was remarkable. As a result, the majority of banks now have their own UPI app. UPI combines several financial features and services under the aegis of a single platform. The only criteria for sending and receiving money are a UPI ID and PIN. With a mobile phone or virtual payment address, a user may perform real-time bank-to-bank transfers or payments via UPI (UPI ID).
Who was the driving force behind UPI?
The National Payments Corporation of India (NPCI), in collaboration with the Reserve Bank of India and the Indian Banks Association, developed and introduced UPI (IBA). Like Visa and MasterCard, NPCI is in charge of managing the RuPay payment system. It makes it easier for various banks to connect and transfer money. Another NPCI project was Instant Payments Service (IMPS). UPI is seen as an improvement over IMPS.
How does UPI function?
With the use of the practical digital payment method known as UPI, consumers may transfer money between banks without using their account number, bank name, account type, or IFSC.
Here are the requirements for using UPI to make a fund transfer:
- Bank account
- Active mobile number (linked to user’s bank account)
- Internet connection
- Registration on UPI and mPIN generation
An individual identity known as a UPI ID is connected to a bank account. It can only be used to transmit and receive money. To authorise a financial transfer using UPI, a 4-digit personal identification number known as UPI PIN is needed. The account holder is in charge of setting the PIN.
Features of UPI
UPI can be used in three main ways:
- With the UPI ID (or Virtual Payment Address, VPA) of the sender/receiver
- Scanning the UPI QR code
- To enter the receiver’s account number and IFSC Code
The total secrecy and rapid financial transfers offered by this payment method are its key advantages. Moreover, users can connect their UPI ID to various bank accounts. UPI contains all of the features of several payment methods, including RTGS, NEFT, and checks. The transactions and services that may be carried out utilising UPI are listed below:
- Mobile bill payments, payments for shopping bills, restaurant bills, etc.
- Can be used online to make payments or as a default payment method for future payments.
- E-commerce giants are also providing UPI payment option through BHIM app (Bharat Interface for Money).
- This app can be used to transfer funds from one account of a user to the other of the same user.
- For requesting money from others.
Currently, there are no fees associated with UPI transactions. There used to be a small fee for utilising UPI, which was fixed at Rs. 0.50 per transaction. To encourage digital transactions, the government did away with all fees, nevertheless. Due to the widespread promotion of their UPI app, several banks no longer charge consumers any fees. The UPI-based app may be downloaded for free through internet sites.
What is UPI 2.0?
The National Payments Corporation of India (NPCI) created the Unified Payments Interface (UPI) system. UPI 2.0 is an updated version of this system (NPCI). It provides extra capabilities including the ability to link numerous bank accounts, share invoices, and provide overdrafts. It promises to give users in India a more streamlined and practical digital payments experience.