{"id":1660,"date":"2016-11-24T22:30:13","date_gmt":"2016-11-24T17:00:13","guid":{"rendered":"http:\/\/easybankingtips.com\/?p=1660"},"modified":"2016-11-25T10:03:04","modified_gmt":"2016-11-25T04:33:04","slug":"unified-payment-system-faqs-upi","status":"publish","type":"post","link":"https:\/\/easybankingtips.com\/unified-payment-system-faqs-upi\/","title":{"rendered":"UPI: Some Very Frequently Asked Questions Answered"},"content":{"rendered":"

UPI or Unified Payment Interface<\/strong> is a platform\u00a0that enables you to make or receive payments using a virtual address on your smartphone.<\/p>\n

It was launched by the former RBI Governor Raghuram Rajan in February, 2016. This is a monumental step towards cashless economy.<\/p>\n

Over the past few decades, the advancements in information technology have made it possible for us to use plastic money<\/strong> (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<\/strong> such as PayUMoney, Paytm and so on.<\/p>\n

So, essentially, the UPI turns your smartphone into a virtual debit card<\/strong>, helping you send or receive money seamlessly.<\/p>\n

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

What is UPI?<\/h2>\n

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.<\/p>\n

IMPS is more advanced and faster than NEFT (National Electronic Funds Transfer<\/strong>).<\/p>\n

Consider this<\/strong>: The NEFT requires you to add your payee as a beneficiary and then wait for your bank to approve it before you\u2019re able to initiate a transaction. Again, it takes a couple of hours for the money to hit payee’s account. So, basically, it\u2019s a cumbersome and time-consuming process, right?<\/p>\n

On the contrary, the UPI simply requires you enter the recipient\u2019s virtual address (e.g., ravi@hdfc.com) to make the payment on the fly. Really, it\u2019s that easy and fast!<\/p>\n

Great, So Who is Behind Unified Payment Interface?<\/h2>\n

The National Payments Corporation of India<\/a> (NPCI<\/strong>) is the pioneer of Unified Payment Interface<\/strong> 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.<\/p>\n

What is a Virtual Payment Address?<\/h2>\n

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\u00a0via their mobile devices.<\/p>\n

The Virtual Payment Address effectively replaces your bank account details. In other words, it\u00a0keeps your account details a secret from\u00a0the sender or receiver of funds.<\/p>\n

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.<\/p>\n

Therefore, all you need to know about a payee is their Virtual Payment Address (VPA) and nothing else!<\/p>\n

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.<\/p>\n

I See. So How Does Unified Payment Interface Really Work?<\/h2>\n

The conventional fund transfer services such as NIFT (National Electronic Funds Transfer<\/strong>) 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.<\/p>\n

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\u2019s Aadhaar Unique Identity number<\/strong> and mobile number<\/strong> or virtual payment address<\/strong>. There\u2019s no need for recipient\u2019s bank account holder\u2019s name or their account details.<\/p>\n

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.<\/p>\n

Essentially, there are two types of addresses \u2013 global and local.<\/p>\n

While Global account requires your mobile phone number, Aadhaar number and bank account number, the Local address is your virtual payment address<\/strong>.<\/p>\n

What makes the UPI an easy and convenient platform is it doesn\u2019t require you use any additional app. If you\u2019re using your bank\u2019s app and your bank is UIP-enabled, chances are your app already has the feature.<\/p>\n

Here\u2019s an example of ICICI Banks\u2019 UPI Interface on their mobile app<\/p>\n

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So, for example, if you pay for dinner at a restaurant (who should be<\/em> 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.<\/p>\n

What Can I Do with UPI?<\/h2>\n

You can pay for pretty much every service you\u2019re using right now, including mobile recharge, online shopping, booking tickets and everything in between.<\/p>\n

Moreover, sending and receiving money between your friends and family will also become very easy moving forward.<\/p>\n

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.<\/p>\n

They usually park their money by loading their digital wallets. However, the parked money doesn\u2019t earn them any interest.<\/p>\n

According to Centrum, these services will become redundant<\/a> once the UPI system becomes mainstream among retailers.<\/p>\n

Unless, the digital wallet services com up with any compelling offers or innovation to stay relevant to their users, they\u2019re bound to face the heat in the long run.<\/p>\n

What about Payment Gateways?<\/h2>\n

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.<\/p>\n

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.<\/p>\n

Is UPI Available for Me to Use Now?<\/h2>\n

The UPI was launched in January, 2016 and was available to banks in April, 2016. While it\u2019s 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\u2019s mobile app.<\/p>\n

If you\u2019re a customer of the ICICI bank, you can download iMobile which offers a great experience with their UPI. Please, watch the video below.<\/p>\n