Full Form of UPI – Unified Payments Interface
The full form of UPI stands for Unified Payments Interface. UPI is a real-time payment interface developed by the NPCI, that facilitates instant transfer between two bank accounts, incorporating multiple bank accounts in one interface, eliminating the need to manage multiple accounts separately while seamlessly making payments for purchases or to peers.
How Does UPI work?
UPI (Unified Payments Interface) connects multiple bank accounts with one app using the user’s mobile number. Once these bank accounts are connected with the app, the user can make payments to other bank accounts from his bank account instantly. The user gets to select the bank account he needs to use every time he makes a transfer or payment.
To facilitate the use of UPI (Unified Payments Interface) for their customers, the banks have to come on board for UPI. Customers can not use UPI if their banks have not opted to participate in the UPI ecosystem.
Features of UPI
UPI has the following useful features
#1 – Money Transfer Around the Clock Every Day
UPI (Unified Payments Interface) works round the clock and on all days even on bank holidays. This payment system works much better than NEFT, which has timing limitations to conduct the transactions and IMPS, which requires you to handle your different accounts differently.
#2 – All Bank Accounts in One App
UPI integrates all bank accounts in one app eliminating the need to keep multiple bank apps to manage multiple bank accounts. This simplifies the payment job for users significantly.
#3 – Virtual Payment Address (VPA) to Customer
The customer is given a virtual address eliminating the need to enter the details such as account and card numbers while making payments. The money is sent or received in the user’s bank account mapped with this virtual address. Users can also send money using QR code which has an inbuilt virtual payment address.
#4 – Single Click 2-Factor Authentication
Provides two-factor authentication for the safety of users, merchants, and banks.
How to Register for UPI?
User needs to follow a number of easy steps to register for UPI –
Step #1 – App download:
The user downloads a UPI app from the app store. There are a number of UPI apps available which a user can use for his banking transactions. Banks also offer UPI (Unified Payments Interface) on their apps to keep the customers hooked on to their apps. Third-party apps are more popular than the bank apps for UPI transactions.
Step #2 – Create Profile:
After downloading the app, the user creates a profile putting in his basic details like name, mobile number and picks up a virtual payment address and a password.
Step #3 – Add Bank Account:
Under this step, the user adds his bank account using his linked mobile number. The user should have his mobile number to be necessarily linked to his bank account to add accounts. Users can not add bank accounts that are his own but not linked with his current mobile number.
How to Generate a UPI Pin?
- While requesting to link his mobile number, the user gets a One time password (OTP) on his registered mobile number. The user is prompted to enter the last six digits and expiry date of his debit card issued by his bank.
- The user enters the details and the OTP. The user then enters his preferred UPI pin, which he is prompted to enter twice. Once this is done, the user’s UPI is generated.
How to Perform a UPI Transaction?
To perform a UPI (Unified Payments Interface) transaction user follows the following simple steps
Step #1 – Choose a Mobile Number, an Account or a Merchant to Pay:
UPI payments can be done to another user using his mobile numbers, to a bank account using the account number and IFSC and also to merchants by picking the ones which are available on the app or by scanning QR codes
Step #2 – Enter the Amount:
The user has to enter the amount he wants to transfer or else there’s an existing bill payment due, the amount may come prefilled and the user can change the prefilled amount before the transfer.
Step #3 – Select the Bank Account:
The user gets to select the bank account he wants to make the transfer from. This selection happens in the final stages of the transaction.
Step #4 – Enter the UPI Pin:
The user puts in the UPI pin to make the transaction. After entering the right UPI pin, the transaction gets completed and the transfer is initiated, which also gets completed within seconds.
The user gets an SMS from the bank about the transaction one the payment is successful.
What are UPI Charges and Fees?
- Most applications do not charge for UPI transactions on their platform
- Most banks also are not charging anything to their customers for transactions
While the transactions are free for now, banks and apps are stipulating a possible fee for the transactions. These charges, whenever they will come, will still be lower than many other forms of payment that are commonly used in day to day lives.
Is UPI Better Than Cash or Card?
UPI is essentially a digital mode of transaction and can be termed as better than cash. The ability of UPI to put all bank accounts under one app also makes it better than cards. A one-click transfer without charges makes UPI a highly adoptable proposition for banks and customers alike. It is beneficial for merchants too as it gives them a mode to collect payments without paying transaction charges, which are the norm with debit and credit card transactions.
UPI is a revolutionary invention that has led to a significant change in the payment ecosystem of the country. Implemented in India, it has garnered global accolades for the ease of its operations and zero or low transaction costs.
The interface has picked up pace after the demonetization of the central government and has helped solve payment woes of people across the country. As of March 2019, a total of 144 banks have got themselves on UPI facilitating transactions of a whopping Rs. 1.334 trillion (USD 19 billion). While the payments may look small with respect to the global standard of digital payments, they are still significant for the country where mobile data adoption has started picking up as recently as 2016.
This has been a guide to the Full form of UPI i.e (Unified Payments Interface) and definition. Here we learn how to register for UPI, how to generate UPI Pin, how to execute UPI Transaction along with its features. You may refer to the following articles to learn more about finance –