Banking Guides

UPI: Some Very Frequently Asked Questions Answered

UPI or Unified Payment Interface is a platform that enables you to make or receive payments using a virtual address on your smartphone.

It was launched by the former RBI Governor Raghuram Rajan in February, 2016. This is a monumental step towards cashless economy.

Over the past few decades, the advancements in information technology have made it possible for us to use plastic money (debit card and credit card) and make payment easily. Moreover, in the past several years, the increasing use of the Internet, smartphone phone, and applications have made it possible to make payment via digital wallets such as PayUMoney, Paytm and so on.

So, essentially, the UPI turns your smartphone into a virtual debit card, helping you send or receive money seamlessly.

In this post, we will try to answer some of the most frequently asked questions about the UPI or Unified Payment Interface platform.

What is UPI?

The UPI or Unified Payment Interface is like an email address or a Unique Identifier which your bank uses to send or receive money on your behalf. In case of UPI, the bank uses the IMPS (Immediate Payments Service) to complete the transaction.

IMPS is more advanced and faster than NEFT (National Electronic Funds Transfer).

Consider this: The NEFT requires you to add your payee as a beneficiary and then wait for your bank to approve it before you’re able to initiate a transaction. Again, it takes a couple of hours for the money to hit payee’s account. So, basically, it’s a cumbersome and time-consuming process, right?

On the contrary, the UPI simply requires you enter the recipient’s virtual address (e.g., to make the payment on the fly. Really, it’s that easy and fast!

Great, So Who is Behind Unified Payment Interface?

The National Payments Corporation of India (NPCI) is the pioneer of Unified Payment Interface which has been set up with the assistance of the Reserve Bank of India (RBI) and Indian Banks Association (IBA). The NPCI also operates the Rupay payment infrastructure helping different banks to interconnect and transfer funds.

What is a Virtual Payment Address?

The Virtual Payment Address or VPA is a unique address provided to the user of UPI payment system, allowing them to send and receive payments via their mobile devices.

The Virtual Payment Address effectively replaces your bank account details. In other words, it keeps your account details a secret from the sender or receiver of funds.

While conventional fund transfer mechanism such as NIFT required you to enter your payee’s bank account number and IFSC code, the Virtual Payment Address completely does away with these details altogether.

Therefore, all you need to know about a payee is their Virtual Payment Address (VPA) and nothing else!

The Virtual Payment Address is highly flexible, meaning you can change in anytime. It looks like an email address, e.g., ravi@axis or meera@hdfc.

I See. So How Does Unified Payment Interface Really Work?

The conventional fund transfer services such as NIFT (National Electronic Funds Transfer) is cumbersome and time-consuming as it requires you to create a beneficiary profile, wait for your bank to approve it and then wait a couple of hours before the transaction is completed.

The idea behind UPI is to remove all the hassle and make sending/receiving money a breeze. The interface only requires you to enter recipient’s Aadhaar Unique Identity number and mobile number or virtual payment address. There’s no need for recipient’s bank account holder’s name or their account details.

As of today, 29 banks have agreed to start this service. Therefore, if your bank is already UPI-enabled, you can ask your bank to connect your account with the UPI.

Essentially, there are two types of addresses – global and local.

While Global account requires your mobile phone number, Aadhaar number and bank account number, the Local address is your virtual payment address.

What makes the UPI an easy and convenient platform is it doesn’t require you use any additional app. If you’re using your bank’s app and your bank is UIP-enabled, chances are your app already has the feature.

Here’s an example of ICICI Banks’ UPI Interface on their mobile app


So, for example, if you pay for dinner at a restaurant (who should be UPI-enabled), you just need to share your virtual payment address with them. Once they request money, you will get a notification for the authentication. You can approve the payment by entering your password and authenticating the transaction to complete the payment. Neither party requires to reveal their bank account details at all. It works 24/7.

What Can I Do with UPI?

You can pay for pretty much every service you’re using right now, including mobile recharge, online shopping, booking tickets and everything in between.

Moreover, sending and receiving money between your friends and family will also become very easy moving forward.

Many people these days are using mobile wallet services such as PayZaap, Paytm, Freecharge, Oxigen, Citrus Pay and MobiKwik for paying a variety of services they use on a daily basis.

They usually park their money by loading their digital wallets. However, the parked money doesn’t earn them any interest.

According to Centrum, these services will become redundant once the UPI system becomes mainstream among retailers.

Unless, the digital wallet services com up with any compelling offers or innovation to stay relevant to their users, they’re bound to face the heat in the long run.

What about Payment Gateways?

Payment Gateways such as CCAvenue, Instamojo and EBS essentially aggregate various payment methods such as Credit cards, debit cards, net banking and digital wallets. They also play a huge role in customizing payment options and payment page, an area the UPI is not yet designed for.

Moreover, the Payment Gateways also play a key role in resolving any disputes between the merchant and consumer. Therefore, these payment gateways are likely to remain unaffected by the emergence of UPI. However, the UPI platform can mature and become an alternative to payment gateways in future.

Is UPI Available for Me to Use Now?

The UPI was launched in January, 2016 and was available to banks in April, 2016. While it’s in the nascent stage, 29 banks have agreed to offer UPI service to their customers. You have to first ask your bank to see if they are UPI-enabled and the platform has been extended to your bank’s mobile app.

If you’re a customer of the ICICI bank, you can download iMobile which offers a great experience with their UPI. Please, watch the video below.

Many popular eCommerce companies such as Flipkart and Snapdeal are already working on integrating the UPI into their system.

So, very soon, you will see it as a convenient payment option across the eCommerce sites.

Unified Payment Interface App Download

Quite a few banks have already updated their smartphone apps, adding the UPI feature. There are a few third-party apps too.


If you have several bank accounts with different banks, then you could download simply one UPI app such as PhonePe and connect all your accounts to it for UPI transactions.

If you’re an Android device user, you can download UPI app from participating banks here.

What are the Charges for Using UPI?

The NCPI has announced that they will charge 50 paise per transaction which will appear on your bank statement as IMPS transaction.

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