UPI: Unified Payment Interface – A step of India towards Cashless Economy
RBI Governor, Sh. Raghuram Rajan (born 3 February 1963) who became governor on 04th September 2013 by replacing Sh. D. Subbarao, now going to be replaced by Sh. Urjit R Patel on date 04th September 2016. Sh. Urjit R. Patel (born 28 October 1963) is currently serving as Deputy Governor of the Reserve Bank of India (RBI).
On April 11, 2016, the soft launch of UPI was announced by Dr. Raghuram Rajan. For the last few months it was under pilot run mainly with employee, customers. The purpose of „pilot run‟ was to ensure that technical glitches, if any, are fixed and the product gives a smooth experience for immediate „Pay‟ and „Collect‟ with Virtual Payment Address (VPA).
After assessing the success of pilot run, RBI had accorded their final approval for public launch of the product with a press release of NPCI (National Payment Corporation of India) issued on 25th August 2016.
India moves a step closer to becoming a cashless economy this month with the launch of unified payment interface (UPI), the brainchild of RBI governor Raghuram Rajan. The UPI is all set to become a game changer in the e-commerce sector. Shopping online will become easier since making online payments need not include entering your card number, expiry date, CVV code and password etc. Using the e-commerce firm’s UPI id, payments can be made in a jiffy!
The same holds true for cash-on-delivery payments as well. While customers can pay the e-commerce firm directly, they can also pay the delivery boy using his UPI id or – better still – using the QR code the delivery boy carries on his UPI app!
The Economic Times reports that 29 banks are a part of the UPI network. However – in what is yet another bonus for customers – any bank’s systems can be used on the UPI to make payments or transfer money.
What is UPI: Unified Payment Interface?
UPI is a unique payment solution which empowers a recipient to initiate the payment request from a Smartphone developed by NPCI and RBI. It facilitates „virtual payment address‟ as a payment identifier for sending and collecting money and works on single click 2 factor authentication.
The interface is the advanced version IMPS which is a 24X7funds transfer service unlike NEFT and RTGS. UPI will allow a customer to have multiple virtual addresses for multiple accounts in various banks. In order to ensure privacy of customer’s data, there is no account number mapper anywhere other than the customer’s own bank. This allows the customer to freely share the financial address with others. A customer can also decide to use the mobile number as the name instead of the short name for the virtual address like 1234567890@xyz.
Unified Payment Interface(UPI) have following features:
- UPI system does not require having details of bank account like Account number, IFS code, Card detail for anybody who want to transfer and get the money. The only thing which is required is the Virtual-ID of payee.
- First let the member banks be part of UPI, then banks will integrate with their existing mobile apps and then you can download the UPI enable app of that particular banks i.e. If you like Axis Bank then download Axis Bank UPI MOBILE APP.
- UPI enabled App of any of member bank can be used to manage your multiple bank accounts in different banks. Need not download App of all the banks in which you are having an account. This means that you can add multiple bank accounts to a single bank’s UPI app.
- What you need to start banking is: (a) Smartphone (b) Installed Bank Mobile App of any bank of your choice like for hdfc- payzapp, ICICI – Pocket etc.)-(Only UPI enabled App is to be installed) (c) Register with your mobile number, GET unique UPI-ID and start banking. (d) Payee also must have UPI-ID (Virtual-ID).
While checking out from the shopping site, UPI will also be displayed as a payment option along with debit card, credit card and net banking. Select UPI to get an alert on your mobile phone, punch in your M-Pin to authenticate the transaction from your phone and transaction will go through.
We can say that It is like Paytm where you can transfer the money from one wallet to another using just mobile number, which is already prevailing for Banks as well but between same banks i.e. If you have hdfc mobile app you can transfer the money between another guy who has hdfc payzapp, if you have icici pocket app you can transfer the money from one pocket app to another using mobile number, BUT WITH UPI YOU WOULD BE ABLE TO TRANSFER THE MONEY FROM ONE HDFC PAYZAPP TO ANOTHER ICICI POCKET APP – This is the essence of UPI. If you dont have bank account then also you can install any bank app and send/receive money in your app from anybody who has UPI enabled app.
There is a minimum and maximum limit of money that can be transferred using UPI. A minimum of Rs. 50/- and Maximum Rs. 1lac can be transferred using UPI. You can pay for transactions as low as Rs 50 and go all the way up to Rs 1 lakh. Payments can be made between friends, to merchants and even to delivery boys instead of doing cash on delivery. All you need is the unique ID of the ecommerce firm, of any merchant, friends etc and transfer the amount instantly.
UPI is available 24X7.
It also provides an option for scheduling push and pull transactions for various purposes like sharing bills among peers.
To make a payment, payer need not to add the account of payee as Beneficiary in your net banking. All you need is the UPI-ID of payee and you can transfer funds and you will also receive a confirmation the money has been transferred to desired payee or not.
- By using the UPI app, one can transfer money to another person through a unique virtual address (virtual addresses are aliases to a bank account allowing a customer’s account to be uniquely mapped), or mobile number, or Aadhaar number. Neither the payer nor the payee will have to share their bank account details, IFSC code, etc with each other. The other advantage is that a seller can also raise a payment request. As a result, it is also supposed to be used by merchants to raise invoice requests.
Steps for using UPI:
- Have an Android based Smartphone.
- Install the UPI enabled App of bank of your choice from google play store. It is not necessary to install the App of the bank in which you are having an account. UPI enabled App of any member bank may be installed.
The next step is to authenticate your mobile number through an SMS (will be done automatically by the app). Create a passcode to restrict access to the application.
Add your bank account to the downloaded app. Register your account number, name and the last 6 digits of the debit card along with the expiry date. This needs to be done only once.
It does not require an account number of payee, or bank details, or IFS code for payments. Users will have to create a virtual handle (with the UPI application) which will read as (for example) yourname@AxisBank or MobileNumber@AxisBank. The virtual ID will be enough for funds transfer.
- Now you are ready to make payment: Add the payee’s virtual ID, put in the full name and fill in the transaction amount. Money transfer happens in real time. (This means the recipient also needs to be on the UPI platform.)
- Payment request can also be created:Add the person’s virtual ID, fill the amount requested and also set a deadline for the alert before sending the request. The payer will receive a payment request on his mobile.
Member Banks: For providing UPI enabled App?
NPCI’s decision was to allow only those banks with 1,000 customers, 5,000 transactions and success rate of around 80 percent during the pilot runs to go live. Some big lenders like SBI have not been able to meet the deadline. SBI official said, “App for the UPI is ready. It has to be tested thoroughly to avoid glitches before making it available to millions. Bank has largest retail customer base in the country and we do not want complaints to grow exponentially by going live in a hurry.” SBI will further examine the app with closed-user group and may go live in about a month’s time, the official added.
The UPI launch was awaited as it is expected to give a significant boost to mobile money transfers. UPI is built on the existing Immediate Payment Service (IMPS) that allows real-time transfer of money 24×7 and is also interoperable across banks which, giving it a leg-up compared with other money transfer applications.
As per Press Release of NPCI dated 25-08-2016,
Following Banks are providing UPI enabled mobile app on Google Play Store:
- Andhra Bank
- Axis Bank
- Bank of Maharashtra
- Bhartiya Mahila Bank
- Canara Bank
- Catholic Syrian Bank
- DCB Bank
- Federal Bank
- ICICI Bank
- TJSB Sahakari Bank
- Oriental Bank of Commerce
- Karnataka Bank
- UCO Bank
- Union Bank of India
- United Bank of India
- Punjab National Bank
- South Indian Bank
- Vijaya Bank
- YES Bank.
- IDBI Bank (Not having separate App, but app of other banks can be used)
- RBL Bank (Not having separate App, but app of other banks can be used)
Note: Click Here to download NPCI Press release dated 25-08-2016