Unified Payments Interface (UPI), which is the next generation online payments solution was launched today by Reserve Bank Governor Raghuram Rajan along with Nandan Nilekani, advisor to National Payments Corporation of India (NPCI). The UPI will leverage trends such as increasing smartphone adoption and deeper penetration of mobile data.
Here's a quick guide to everything you need to know about UPI:
What is UPI
UPI is a channel that powers multiple bank accounts into a single mobile application (of any bank) of a participating bank, merging several banking features, seamless fund routing and merchant payments into one hood.
How it will help you
It will empower users to perform instant push and pull transactions and transform the way people make payments today.
UPI will act as a primary device to make payments. This means you won't need to download an app to send and receive money. This, in turn, means you don't need an e-wallet if you are looking for convenience.
How will UPI help in money transfer
To send money to someone, you need to know only their UPI ID - a virtual identity, kind of email address. This could be your name, or your phone number. For instance, if your phone number is 1234567890, then your virtual address could be 1234567890@citi (if your bank is Citibank) or 1234567890@SBI (if you're an SBI customer), and so on.
UPI simply eliminates the need to know the recipients' name, their IFSC code or branch number.
How it works
UPI is built on Immediate Payment Service (IMPS) or an instant interbank electronic fund transfer service through mobile phones. Like IMPS, UPI is also immediate and operates 24x7. IMPS is different than NEFT or RTGS as they both work for certain hours. UPI will also make your online shopping easy. Unlike earlier, where you had to enter your debit card number, expiry date, CVV number and then waiting for the OTP to arrive, you will now only have to enter your UPI ID and you will receive an alert to verify the transaction.
UPI is one of the most secure platforms available. No one else can enter the UPI ID and spend your money, as it uses your phone to verify transactions.
According to AP Hota, MD and CEO NPCI, 29 banks have already agreed to provide UPI services, and he expects the number to increase this year.