India moved a step closer towards becoming a cashless economy with the launch of Unified Payment Interface (UPI). With this new payment method, your smartphones will soon double up as virtual debit cards and you’ll be able to send or receive money instantly. Along with Bharat QR code, it can help you get rid of your wallet all together.
âFor a number of years, we have been saying we need a revolution in banking in India. I think we can confidently say the revolution is upon us. What we have in India is the most sophisticated public payments infrastructure in the world,â Rajan said at the launch of the UPI.
Ever since its launched in Jan 2016, we regularly get questions like What is UPI, How does UPI work, How would it change the way I handle payments in business, etc. In this article, we are trying to explain this new payment method in detail by answering top 10 questions.
1) So, What Is UPI?
The Unified Payment Interface (UPI) can be thought of like an email ID for your money. It will be an unique identifier that your bank uses to transfer money and make payments using the IMPS (Immediate Payments Service). IMPS is faster than NEFT and lets you transfer money immediately and unlike NEFT, it works 24×7. This means that the online payments will become much easier without requiring a digital wallet or credit or debit card.
2) Who is behind UPI?
Unified Payment Interface is an initiative by National Payments Corporation of Indiaâs (NPCI), set up with the support of the Reserve Bank of India and Indian Banks Association (IBA). The NCPI operates the Rupay payments infrastructure that – like Visa and MasterCard – allows different banks to interconnect and transfer funds.
IMPS (Immediate Payments Service) is also an initiative of NCPI. UPI is the advanced version of IMPS.
3) How Does UPI Work?
Currently, if you want to make a bank payment online, you have to enter their account number, account type, Bank name and IFSC code. Even if you have all these details, typing it all in, particularly on a phone, is a painful process. Most banks take upto 12 hours to add a new payee and only then you can make the transfer.
The idea behind the UPI is to do away with all of this. The interface will allow account holders across banks to send and receive money from their smartphones using just their Aadhaar unique identity number, mobile phone number or virtual payments address without entering bank account details.
According to NPCI, so far only 29 banks have agreed to start this service. If your bank is UPI-enabled, you can ask it to connect you to the system. To initiate a transaction, you can use two types of addressâglobal or local. Global address includes your mobile, Aadhaar and bank account numbers. A local address can be a virtual address. Letâs say your bank gives you a virtual ID similar to your email ID (for instance, name@companyname). This virtual address will allow you to send and receive money from multiple banks and prepaid payment issuers.
So, you will no longer need to use a particular app to send and receive money. 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 doesnât require either the driver or you to share bank details. Since UPI runs on IMPS, the service will be available real time and 24X7.
Nandan Nilekani, man behind Aadhar and now an advisor to NPCI, said: âUPI is a layer we have put on IMPS. It (IMPS) didnât really have the easy debit capability and that has been addressed by this platform. We think with UPI coming, it is going to be an important merchant platform. Once it is adopted by all banks, money can be transferred from a bank to any other bank using a mobile phoneâ.
4) What I can do with UPI?
UPI will simplify your online payments. Now, we have to use NEFT, IMPS or a digital wallet such as MobiKwik or Paytm to make a quick payment to the service providers. With the UPI, you simply need to enter your details, and get a billing request on your phone – which you can accept or reject right away.
Taxi aggregators like Uber and Ola, food ordering services like Zomato and Food Panda, online grocery shops like Big Basket will be able to take advantage of the UPI system. Going forward, such companies should be able to register its identifier on the UPI system and receive funds from a customerâs bank account through the UPI. Most of the similar tech companies are now banking on mobile wallets.
Apart from this, you can send money to your family and friends instantly.
5) What will happen to mobile wallets?
This is a burning question asked by most of the industry watchers every since UPI was launched. Mobile wallet companies were worried and there is a reason for that.
The RBI has allowed only banks to become Payment Service Providers of UPI service, keeping mobile wallets out of the service. So, UPI has come as a boon for banks which were loosing ground to mobile wallets like PayTM, Freecharge, Mobikwik, Oxigen and Citrus Pay. Though mobile wallets have been urging the banking regulator to include them as service providers, it has not relented so far.
I think popular mobile wallets like PayTM that have good customer base can still keep using it for quick recharges and movie tickets. Cashback offers can keep them hooked to the platform little longer.
Check out some reactions from the majoj wallet companies:
“The Unified Payments Interface augurs well for us. MobiKwik already has millions of users paying their bills using the wallet,” says Bipin Preet Singh, Founder and CEO MobiKwik. “The convenience, security, and speed that we offer to users keeps bringing them back to the platform. With the Unified Payments Interface in place, our expectation is that we would unlock a new channel for growth since the universe and reach would enlarge.”
Govind Rajan, COO FreeCharge, said “We don’t want people to keep money in the wallet, we want them to use us as a processor,” he says. “That will happen because of the security and speed we can provide, so the more options there are for people the better. We’re not competing with other wallets or digital systems – right now, the challenge is to take on cash.”
Naveen Surya, Chairman, Payment Council of India & MD, ItzCash, said “We are very excited and thrilled with the possibilities of envisioning a simplified and frictionless payments infrastructure with the launch of UPI. All our non-bank members await directions from RBI and NPCI to get ready access and we can surely deliver high digital payments growth as in case of IMPS transactions.”
One thing is sure that unless these wallet companies come up with an innovative way to stay relevant, its going to be an uphill task for them to survive.
6) What about Payment Gateways?
So, we have CCAvenue, EBS, Instamojo and various other payment gateways in India. Question is, what will happen to these payment gateways once UPI is in full force.
Job of these payment gateways is to aggregate various payment methods like Credit cards, debit cards, mobile wallets and netbanking. So, the UPI might become the new net-banking, by replacing it as a payment mode. I
These payment gateways also offer detailed information on received payment (who paid & for what), apart from providing transaction management, reconciliation, insights etc. They also offer customisation at every level (payment options, payment page, etc) which is beyond a simple push-n-pull movement of money via UPI.
Most importantly, Payment Gateways act like a trust custodian â one who provides protection against any dispute between merchant & consumer. This is completely missing in UPI today but it will be there as the platform matures.
7) How secure is UPI?
Nilekani said the security is fool-proof as the transaction will happen in a highly encrypted format. Already NPCIâs IMPS network handles more than Rs.8,000 crore worth of transactions a day, which will exponentially increase with the use of mobile phones.
2 Factor authentication – similar to OTP will be there as its mandated by RBI. In this case, MPIN instead of OTP will be used.
8) Is UPI available now for me to use?
It was announced in Jan 2016 and made available to banks starting 11 April 2016. However, its still in nascent stage and it will take banks little more time to figure it out and add support for it in their mobile app.
âSome banks have gone live with UPI out of 29 banks that had concurred to provide UPI service to their customers. We are confident that several banks will join UPI this year and the number will multiply further. Our focus is in line with the RBIâs vision of migrating towards a âless-cashâ and more digital society,â said AP Hota, MD & CEO of NPCI.
Flipkart bought PhonePe which is said to be working on a product based on UPI mechanism. Snapdeal already has FreeCharge under its wings and Amazon could make its move in the coming months. At ProfitBook, we are also planning to integrate UPI soon with our accounting software.
I’ve tried PhonePe app and it works very well. I could easily transfer money to a friend using just his mobile number. Most of the banks have come up with their own UPI app now. Here is a list..
Links to Download UPI Apps
1. SBI Pay:Â Android
2. HDFC Bank MobileBanking:Â Android, iOS
3. ICICI Pockets:Â Android, iOS
4. Axis Pay UPI App:Â Android
5. Union Bank UPI App:Â Android
6. PNB UPI:Â Android
7. PhonePe:Â Android
8. Canara Bank UPI â eMpower:Â Android
9. United UPI:Â Android
10. Andhra Bank ONE â UPI App:Â Android
11. UCO UPI:Â Android
12. Bank of Maharashtra â Maha UPI:Â Android
13. Vijaya UPI:Â Android
14. South Indian Bank â SIB M-Pay (UPI Pay):Â Android
15. KBL SMARTz (UPI):Â Android
16. OBC UPI PSP:Â Android
17. UPI Bank Transfer with Friends:Â Android
18. DCB Bank UPI App:Â Android
19. Lotza – UPI:Â Android
20. TranZapp â UPI:Â Android
21. CSB UPI:Â Android
I will keep updating this list periodically.
9) What are the charges for using UPI?
NCPI has indicated that they will charge Rs. 0.50 per transaction. On your bank statement, it will appear as IMPS transaction.
Currently, PhonePe is not charging anything for using their app.
10) Can UPI completely replace Cash or Cards?
According to RBIâs estimates, the cash floating in the system is about 18% of the countryâs gross domestic product, making India as one of the most printed currency-dependent country in the world.
UPI’s success depends on few factors. For example, consider these numbers:
There are 760 million Aadhaar cards, and with 26 million of Aadhaar numbers getting added every month, soon the total Aadhaar card issuance will touch a billion by next year. Out of Indiaâs 900 million mobile phones, 120 million are smartphones.
So, even though the use of smartphones is increasing, its nowhere near the levels of Aadhaar registration. In India, its estimated that there are over 25 million merchants and only 1.2 million have card readers. Still a major chunk of risk-averse customers hesitate to use cards.
All out efforts therefore must be made to increase smartphone penetration if UPI is to succeed, eventually rendering cards redundant for online payments.
Final Thoughts
UPI is a great step in right direction and its is set to become an efficient alternative to mobile wallets and make cashless payments faster, easier and smoother for millions of people in India.
It has potential to make micro payments cashless which will benefit both buyers and sellers. Please feel free to ask questions or share your thoughts in comments section below.
Latest Updates On UPI
26 August 2016 – UPI goes live with 4 banks
29 August 2016 –Â Flipkart has launched UPI in partnership with Yes Bank
Also Read
What is Bharat QR and how its useful for your business
How to sell online in India
How to manage healthy cashflow in your business
How to accept online payments from your clients
They are not fake my friend just call them and wait for 10 to 20 minutes they will talk with you
Actually my atm has 18 digits instead of 16 how can i join those atm cards to upi??
Hello Harshal,
I want to include pay by UPI feature in my website where user can mention his VPA and submit.
Then he can choose any UPI payment app like PhonePe, BHIM etc.
My question is how to enable this in my website and who can help me on this?
Regards,
Neeraj
Recently i done VPA transaction for LIC, when i went on PhonePe app for accept to pay i was unable to add credit card there is it correct?
Thanks a lot for the reply.
you can change it by using the HDFC upi app, and create as XXX@hdfc and once u link this @hdfc vpa to ur account, you can simply UNINSTALL the app and use the @hdfc vpa. (TESTED and works fine)
Thanks for the reply.
Sir i did not received payment done by UPI tez app account . please reply for message. all tez helplines are fake. contact on email please.
To be honest you cannot create UPI pin without having debit card details if you are Registering for the first time
Hmmm paytm@icici is the default VPA of paytm app when you try to top up through VPA option…. there can’t be another VPA with same ID as it is unique which means you should approach PAYTM for this
No you cannot change the extension
Contact your bank for MPIN.
UPI came out as a very easy payment method in India. Now it is taking the place of digital wallets.
I had failed one bank transfer on Bheem and Complaint on Bheem app for sme but I hot call from Cyber criminal Prince bhardwaaj real name he create one upi link for collect pay request and Paytm shows like paytm@icici that Paytm fault using link like this and Bheem data not secured also and no customer care service due to wrong name request look. Like bank he transfer 10k from my salary account without card details and OTP or password
Can you please explain how you lost it?
What are the charges on paying using upi? What is the limit of the free transactions?
Paytm charges 3% charge on transferring money from paytm account to other bank account. But upi does not charge any amount. Paytm has long procedure of adding money to wallet asks otpa etc. It is time taking process and chargeable. So upi transaction is better. đ
We have a solution for using UPI to pay salaries. You can write to sales@wibmo.com
Hello Sir, I had a query that after I created a VPA in PhonePe, it by default got created as “XXX@ybl” As it is associated with Yes Bank, it took “ybl”, but couldn’t i change it to my own bank’s mail id; i.e.; “XXX@hdfc” or something because after all I am not associated at all with Yes Bank, and if any problems arise later.
How much time it takes to use my upi after the trail limit exceeded
What happens when a user changes/updates the registered mobile number of the respective bank account? Will the upi handle then cease to exist or will the vpa be automatically linked to the new updated number?
Not yet
Is upi transaction possible from current account if yes then how?
Sir, Is it now Enabled for current account holders. Can i Make Transactions from Current account to Current Account?
UPI PAYMENTS ARE JUST FOR HACKERS & LOOTING THE PEOPLE I LOST 10K EVEN HE TRIED TO EMPTY MY BANK ACCOUNT ICICI BANK NOT GIVING EVEN DETAILS OF BANK ACCOUNT HOLDER
Thankyou mate, got it now, yeah I’ve too much stuck money on various wallets for later use, which could have been used elsewhere.
If someone don’t have ATM card but he wants to use upi. Tell me how to create virtual payment address of upi without ATM card
In PayTM, you have load money first in the wallet. With UPI, you can transfer money directly from your bank account. Nowadays, almost all of the banks have UPI option in their app. So, all you need to know is UPI address of the receiver. Its much better than Paytm.
I still didn’t understand why it’s better than Paytm? Like for two parties to transfer money both should have Paytm, same with UPI too? Paytm also works 24hrs and is instant, so why would people switch to UPI, and install a new app?
sir the phonepe and bhim apps are asking the last 6 digits of the debit card and it’s expiry date, but i don’t have a debit card for my sbi account. what should i do?
also the corporation bank is showing some errors in generating upi. is it not supporting upi yet?
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I don’t think that’s possible at the moment. UPI is for bank accounts, not for the cards.
Sir, I had transferred my money from icici mobile banking through UPI to my saving bank account sbi. But, my money was not send to my account and money was dedited from my ICICI mobile wallet. Sir, please tell me what can i do.
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@snpattanaik:disqus , As of today, its not enabled for current account holders. I think, it should be available soon.
Hi @disqus_Au7nRWpP2R:disqus .
Yes, as of today, its not enabled for current account holders. I think, it should be available soon.
Glad I could help.
I think, some of the payment gateways have started supporting UPI. If you do the fund transfer manually using UPI, reconciliation will be a problem.
Hi @disqus_FKCzVEqL6b:disqus .
This is strange. Please check with your bank. As far as I know, you don’t need a debit card to generate pin for UPI.
Almost all the private banks like HDFC, ICICI, Kotak now support UPI.
Hi @disqus_D6qnu6589J:disqus .
For this case, businesses normally give an instruction to their bank and then bank transfers the salary using NEFT. That’s the cheapest option.
UPI is not linked with cards. Its linked with your bank account.
Sir, can We create upi for virtualcards provided by various banks or apps?
Sir, Thanks for sharing such a great information, but am looking for something which help me to pay salary to my employees and it also reflects the same not any gateway in my account kindly guide
Yes, currently its focused only on UPI based payments.
The only problem is no link to credit card & second one is no major private player. It will take some time to pickup.
UPI is dependent on ATM/Debit card for UPI pin generation hence not much useful for account holders without ATM card and it is one of the silliest condition put by UPI otherwise a noble concept.
If i integrate UPI from my Android app then, do i need to register my app as VPA or just i can use any VPA for transaction( pay and collect). Will I receive the confirmation on my app for success or failure of payment.
I think, in near future they might add an option to pay credit card dues using UPI but linking of credit card looks difficult.
As of now only the bank accounts are linked to UPI. How about credit cards? Will there be a new system to link credit cards to UPI ?
I think it will be good to have a UPI Plastic Card in which QR CODE & UPI-ID can be printed. And it can be easily shown to merchants for payments.
I want to create a website where person1 wants to buy itemA from person2 and pay directly to person2 through UPI.
I don’t want to go through payment gateways route.
What should i do?
It has help me in finding out more detail about Upi.thank you for sharing such a great information.
Sir, could you tell us , what actually a bhim app does? is the role of bhim limited to connecting to UPI?
Sir, I m using PNB UPI App from one week and through this app i hv transfer 10000 but after using this app i m not able to withraw the money through the ATM, and ATM instruct that limit is over, so sir this app is related with ATM withdraw limit….
Can I use UPI for my current account? Just I had a call with Bank Of Maharashtra customer care, Representative said , UPI is not available for current account. Is it true?
Sir i have transferred money from my phonepe wallet to my bank a.c but it has not credit till now in my bank a.c while my wallet balance is nill . What should i do now . Please reply soon.
If your recipient banks with one of the 30 banks that support UPI, he/she doesn’t need an app to receive money.
If i linked my account with one of the upi app (like phonepe), then can i able to transfer money to other bank account which is not linked with any upi app?
UPI is by far the easiest payment mode. For my business, I am implementing UPI by CitrusPay and PayU. So far, my experience has been superb!
Currently there is a limit of 20 transactions per day and a limit of max Rs 1 lac
per day. This limit might be relaxed in the future.
Debit card details are required to authenticate your account.
Valid point. UPI payments have the same charge as that of Debit cards. The rates above looks very competitive.
Yes I am using HDFC, Indusind and SBI accounts with PhonePe. It works very well. Its powered by Yes Bank but you don’t need to have Yes bank account.
debit card should not be mandatory as we have otp in place and can also validate on onlinesbi if reqd.
I dont have a debit card and even dont want one. How can i generate sbi pay mpin…Pls help or i have to go to branch sbi.
Please confirm on the transaction limit. Is it maximum 1 lac/day or maximum 1 lac/transaction ?
Thank you for such detailed article and helping us aquaint with UPI. It will be interesting to see if consumer preference would shift from wallet companies to UPI considering discounts and cash back offers of wallet companies. Taxation is another issue faced by wallet companies and there survival is under question.
Debit card is required to set the MPIN
Yes
Hi,
Can i download upi app from anyone bank and link all other bank accounts to the same?
Sir we have a current account in our company name can we made payment by UPI
1% of transaction amount is still less than what payment gateways charge for other methods like credit card or wallet payments. I’m sure that these charges will go down in coming days when more and more consumers will start using UPI.
UPI is really good innovation in banking system. I tried it personally. Now trying for integrating UPI payment for E-commerce Website. But Payumoney charges 0.75% 2000 for UPI payment Collection
That true, currently it’s not possible.
I don’t think it’s possible as of now.
Yes it does! But we can’t stop development for the risks involved. Don’t let the fear of falling stop you from flying. We are working hard day and night to fight hackers.
Web Address is better than QR code. You can tell your friend over phone to transact to your account. You can embed web address in a QR code but what’s the use?
That’s right! Do you mind Checking if ATM is bugged before transaction? You know it might be, still you take risk. Same scenario here. Probability of being robbed on street is higher than being hacked in this way. Just use a good antivirus like Biodefender or something.
Yes. To activate UPI you must have Debit Card.
can we pay our credit card bills using this?
YES
I don’t think so. All you need is a bank account number.
Is having a debit card mandatory for registering your bank account no. on UPI app ?
During the registration I have to choose Bank/Account Number for which my mobile number is registered. Also I choose VPA. Then it generates the M-PIN. All this information gets stored on my mobile in the UPI app. There are android apps which are able to get / access information stored in other apps. So getting this stored information would also be possible.
What happens if someone gets this information and is also able to manipulated the SIM or Mobile number registered with the Bank Accounts? If so he will be able to transfer money from my Bank Account. Is it not easier for the fraudster?
I’m not very sure about that. It seems they support most of the bank accounts.
Can I use phonepe app ..
You can try SBI Pay.
You should talk to HDFC customer care.
I am talking about HDFC , Uninstalling & removing sim also not helping.
Service provider for bank or Mobile?
approved
Thanks,
Harshal Katre
Director, ProfitBooks
—————————–
Ph: +91 9923133309
http://www.ProfitBooks.net
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For Sbi account upi any app recommend..sir
It happened with my dual sim phone for ICICI app
Just uninstall the app,
put correct sim in sim-1 slot,
re-installl the app,
try again sending the message and registering
Please note that PayTM is not a bank (As of now). So, UPI will work if your shop keeper has an account with any other bank.
I have canara bank’s UPI.
Supposing for purchase of some article from a shop, for which I have to use the UPI. Supposing he is not having Canara Bank UPI but only paytm, which I don’t have. Now how to transfer money to him, with my cbupi only( he is not having pos facility)?
Which site or app you are talking about? I would suggest to get in touch with the service provider.
I just downloaded phonepe. It initially validates my phone using OTP. Then asks me to add account. But for that it asks my ATM card number and expiry date. So with my sim and ATM card one can initiate transaction. How secured is that?
ATM card number and expiry date is visible to everyone. If some one takes my sim then it’s easily possible know? Please address this issue.
While I am registering by mistake I sent SMS with my different mobile number(Non registered ) . Now every time I am getting error message your mobile number is not registered with bank ? How can now I change my wrong number to registered number?
Any one help?
QR code simply redirects you to some link. So, I’m sure some app developer will soon come up a with a way to pay using QR code. We just need to give UPI some time to become mainstream payment method..
When will we have a QR code for UPI Payment instead of web address or reference address as the ease of transacting transacting via QR code Scan is easier and so companies like PAYTM are benefitting .
When will we have a QR code for UTI payments instead of an web address
UPI is a part of overall internet banking and its as secure as other banking methods such as netbanking or debit cards. RBI is doing their best to enforce various security measures like mandatory OTP or PIN which will ensure minimum impact during unfortunate events of cyber crime.
Recently Indian banks faced one of the biggest cyber crime attack hacking thousands of vanm accounts. Does UPI too faces the same threat in future and if not how is it more trustworthy than debit card and netbanking payments? Please enlighten us all.
Recently Indian banks faced one of the biggest cyber crime attack hacking thousands of vanm accounts. Does UPI too faces the same threat in future and if not how is it more trustworthy than debit card and netbanking payments?
At the time of registration i’ve got fluctuation on my internet connectivity so i observed that the information that i haved entered is showing is already registered after that he is also not allowing me to land on the next step of registration what is supposed to do…..Request you to resolve this asap.
If you are using any payment gateway service, there is a good chance that they will add UPI as a payment option. I would suggest to wait for that as people also need to get familiar with this.
We have a shopping website developed on magento. Is it possible to integrate on that. Any instructions will be appreciated.
Thanks .
Yes, as of now internet connection is required. You need a smartphone to run UPI based bank apps.
Does upi transaction need internet connection