UPI — Simple introduction

What is UPI ?

Unified Payments Interface is a service recently launched by the Government of India. This is a next step in funds transfer & payments technology. I would like to share my views and a simple introduction about UPI.

How UPI works ?

A Bank may enrol themselves with the UPI service which is controlled by NPCI (National Payments Corporation of India). Then they have to create a mobile application to provide the UPI feature. This UPI feature is provided by the banks either in a separate mobile application like SBI Pay or integrated with the existing mobile application. eg., HDFC mobile banking app. Please remember that UPI by itself is not a mobile app. This is where many people where get confused (even I got confused initially ;) )

So, simply to use UPI, you should download the UPI app provided by a bank. It can be any bank.

Simple steps for money transfer using UPI

What’s VPA?

VPA — Virtual Payment Address. This is required to transfer money. It’ll look like an email address.

eg., tester@sbi, developer@hdfcbank etc.,

M-pin :

This acts as the password for any UPI transaction in your app. This has to be set before performing any UPI transaction.

Advantages :

1. Easy to remember beneficiary details (VPA). need not remember tough codes like IFSC code/account number etc., Just remember/know a mail id kind of address (VPA).

2. Need not add any beneficiary details in advance (need not add at all)

3. No service charges (at least as of now) ;)

4. Instant transfer

5. Almost act like a wallet.

6. Service initiated by govt.

7. Reduces dependency on private wallets like paytm etc.,

8. Need not create new accounts like other wallets (just link your bank account)

9. Can also use other bank apps for UPI.

10. Our bank & account details are hidden behind the VPA. The payer will not know which bank do we have account in.

i.e., if you’re an ICICI customer doesn’t mean you have to use app provided by ICICI. You can use any app for UPI. All you need is a valid bank account linked with your current mobile number. This will be verified by the UPI during UPI registration.

10.Our account details are hidden behind the VPA. The payer will not know which bank do we have account in.

Note :

Third party (non-bank) apps also available under UPI (ex., Phonepe, mypoolin etc.,)

Disadvantages :

1. Payment using UPI is yet to be integrated in many e-commerce sites/ online services.
2. Features like using QR code are yet to developed.

Sample screen shots of an UPI transaction in HDFC bank app.

Step 1 : Entering payee details :

Filling VPA details of payee, amount and description of the transfer

Step 2 : Verifying the details (confirmation page)

Verifying the transaction details and entering M-pin

UPI registration process :

Generic steps for registering in UPI

List of Banks enrolled in UPI (as on early December 2016) :

List of banks enrolled in UPI and their mobile apps for upi

Note : Banks enrolled in UPI may increase in future. When we’re preparing this article 30 banks enrolled in UPI.

References :

1. UPI — Wikipedia page
2. NPCI — official twitter URL
3. UPI — official twitter handle
4. UPI — Official documentation
5. NPCI — official website