What is UPI Payment?
A UPI, or Universal Payments Interface, is a method of transferring money between bank accounts and merchants that allows instant real-time payments.
In India, UPI uses Immediate Payment Services (IMPS) to provide instant funds transfers between two banks accounts. It is regulated by the Reserve Bank of India (RBI) and operates on mobile platforms.
Payments by UPI, primarily used for bills payments and online shopping, have seen a dramatic uptick in India as consumers avoid cash payments. As compared to other payment systems available around the world, India’s UPI payment system is significantly more advanced. With the growing affinity of Indian consumers toward digital technology, the landscape of digital payment is rapidly changing in India.
Since UPI payment began operations in 2016, it has processed more than 6.57 billion transactions: its highest number to date. A report from the National Payments Corporation of India (NPCI), which operates UPI payments, shows 6.28 billion transactions worth $10.62 trillion.
According to the report by Minister of State for Electronics and IT Rajeev Chandrasekhar, digital payments in India totaled 4,572 crores in FY2019-20, 5,554 crores in FY2020-21, and 8,840 crores in FY2021-22.
In August 2022, UPI segment processed 6.57 billion transactions worth Indian Rupees 10.72lakh crores, Month-on-month, the volume of transactions was up 4.01 per cent and value increased 2.23 per cent.
Over the last few years, digital payments, using UPI 2.0 and UPI 123PAY, have been on the rise as part of India’s strategy to digitize the financial sector and economy.
What’s UPI 2.0?
A new version of UPI 2.0 launched that allowed users to link their overdraft accounts to UPI handles. UPI 2.0 also has the capability to pre-authorize transactions by issuing mandates to specific merchants. Recurring payments are also made possible through the Autopay facility.
The NPCI plans to implement real-time payment dispute resolution mechanisms covering 90% of complaints by September 2022 and expand Autopay to international markets.
The RBI has allowed UPI to be linked to RuPay credit cards from 8th June 2022, enabling credit card payments to be made without having to carry your credit card around.
NPCI is developing a real-time feature that will reduce banks’ unblocking time to 30 seconds instead of 24 hours.
What’s UPI 123PAY?
Unified Payment Interface (UPI) 123PAY is an instant payment system that allows users of feature phones to use Unified payment interface (UPI) services. UPI 123PAY will enable users to carry out transactions based on four technologies: IVR (interactive voice response), app functionality, missed call-based approach, and proximity sound-based approach.
Payment Options for UPI PAY123 are four.
- UPI app installation that can be used for payments through a mobile phone manufacturer’s over-the-air programming.
- The customer can use a dedicated merchant payment number by giving a missed call. The incoming authentication request will require a PIN verification.
- Payment transactions are completed using predefined phone numbers via Interactive Voice Response (IVR).
- A sound-based proximity data communication method is used for offline payments.
The Reserve Bank of India’s governor Shaktikanta Das recently launched Unified Payments Interface (UPI) Lite to speed up the payment process for low-value UPI transactions on September 20, 2022.
What is UPI Lite
UPI Lite allows users to make small payments up to Rs 200 without using a UPI PIN. The maximum amount that can be transferred will be Rs 200 and the maximum amount that can be transferred at a later date will be Rs 2,000.
Since the UPI LITE feature of the BHIM App is now enabled, users will be able to make near-offline transactions. We are one step closer to processing a billion transactions a day on the UPI platform by using UPI lite, which reduces the load on the core banking system and improves transaction success rate.
UPI Lite is set to be offered by below Banks in India
Canara Bank, HDFC Bank, Indian Bank, Kotak Mahindra Bank, Punjab National Bank, State Bank of India (SBI), Union Bank of India and Utkarsh Small Finance Bank
UPI Payment Service for Customers
A UPI account may be linked to multiple bank accounts to enable real-time payments from one account to another account. Virtual Payment Addresses (VPAs) or UPI IDs can be used to send or request money from a bank account using the mobile number associated with know-your-customer (KYC). For contactless payments, UPI generates a QR code specific to each other’s user account.
- A UPI-enabled app allows you to manage all your bank accounts in one place instead of having to open separate apps for each.
- When you register with the app, you can set a UPI PIN. You can also update it at any time.
- UPI enabled apps notify you when recent transactions are updated.
- On a UPI-enabled app, you can check your registered bank account balance.
- A UPI-enabled app can help you verify the recent transactions you have made through your account.
- One of UPI’s most popular features is paying money. To do so, you can use any of the following details:
- Virtual Addresses
- IFSC code with Bank Account Number
- MMID and Mobile Number
- BHIM Aadhar Pay
- Consumers can request money using their virtual addresses when they know the amount and address of the payer.
- The UPI app lets you log in to the app with more than one bank account. However, all bank accounts must be linked to the same mobile number. During the transactions, you can choose the bank account from which to process the UPI payment.
UPI Payment Methods in India:
Bharat Interface for Money (BHIM) app is government-managed and lets you make payments using the Unified Payments Interface (UPI).
Payments can be accepted directly via UPI with apps such as free payment links, Phonepe, Gpay, BHIM, WhatsApp, SMS, etc. without the hassle of SMS notifications or remembering your VPA.
The first step in accepting payments from such apps as WhatsApp, Phonepe, Gpay, Paytm, AmazonPay and others is to integrate the application with a payment gateway that supports UPI.
UPI Payment features and benefits:
- A single mobile application enables access to multiple bank accounts.
- The UPI system allows money transfers round the clock, every day of the year, through mobile devices.
- Two-factor authentication is provided with a single click – in compliance with regulatory guidelines, but it also provides seamless, single-click payment capabilities.
- A virtual address is used for Pull & Push to provide incremental security since the customer does not need to enter sensitive information like credit card numbers or CVV code.
- After making a UPI payment, you can share bills with your friends.
- It is an excellent alternative to cash on delivery hassles or running to the ATM to pay in cash.
- Payments by merchant through single applications or in-app purchases.
- Several types of payments can be made using it, such as utility bills, over-the-counter payments, or barcode (scan and pay) payments.
- There are no fees involved in the use of the app. It can be used to pay utility bills, over-the counter payments, barcode (Scan and Pay) based payments. It can be used for making donations, collections. Direct complaints can be logged using the app.
UPI payments are changing the way we send and receive money, reducing dependence on bank systems. It has simplified transactions, made them more secure, and made them easier. Using NCPI’s UPI, you can make hassle-free, cashless payments, and it’s relatively simple.
If you regularly use your online banking facility, you may find the UPI application useful for sending and receiving money online.