It is a system for transferring funds from one bank account to another through a mobile application. UPI, or Unified Payment Interface, is referred to as mobile payments. Account-holders have been able to conduct financial transactions much more easily with UPI since it was introduced. Using UPI can provide you with a number of benefits.
What is UPI Payment?
IMPS and NEFT are old-school payment methods that are being replaced by UPI Payment. UPI Payment allows users to transfer money between bank accounts without incurring extra fees.
Whenever an individual wants to conduct a transaction through UPI, he or she needs to create a UPI ID, which serves as the virtual payment address for the account holder, and a UPI PIN, which serves as the authentication code.
In collaboration with the Reserve Bank of India (RBI) and the Indian Banks Association (IBA) NPCI, short for National Payments Corporation of India, developed an infrastructure that facilitates the collection of payments between banks and individuals. One such example is PayU.
How Does UPI Payment Work?
It has been made so easy to transfer funds with UPI, your recipient’s account and bank names do not need to be remembered. Their UPI mobile number is all you need.
By downloading any app that supports UPI services such as Google Pay, PhonePe, BHIM, etc., you can create a new UPI ID on your Android/iOS smartphone. Your bank account associated with your mobile number will be verified once the app receives your mobile number.
Upon completion of the verification process, your UPI ID will be registered in the App and you will be able to use it for bank services as well as fund transfers through a mobile number in your address book.
How Can I Use UPI?
Your online payments will be simplified with UPI. In order to make a quick payment to service providers, we have to use NEFT, IMPS, or a digital wallet like MobiKwik or Paytm. With UPI, simply fill in the details on your phone and you will receive a billing request you can accept or reject immediately.
Online grocery shops like Big Basket, online taxi aggregators such as Uber and Ola, and food ordering services such as Zomato and Food Panda, and taxi aggregators like Uber and Ola will be able to use the UPI system. In the future, these companies should be able to register their identifiers with UPI and receive funds from customers’ bank accounts. Mobile wallets are now a big part of similar technology companies’ business models.
Besides this, you can also instantly send money to your loved ones.
Is UPI Secure?
As the transaction will take place in an encrypted format, Nilekani said the security is foolproof. With the use of mobile phones, NPCI’s IMPS network will handle approximately Rs.8,000 crore’s worth of transactions in a day.
As mandated by the RBI, 2FA will be available as well as OTP. Instead of OTP, MPIN is used in this case.