The Unified Payments Interface (UPI) is a system that integrates various bank accounts, smooth fund routing, and merchant payments into a single mobile application (of any participating bank). Additionally, it supports "Peer to Peer" collection requests that may be planned and paid for according to need and convenience.
In light of the aforementioned circumstances, NPCI carried out a pilot launch with 21 member banks. Dr Raghuram G. Rajan, former Governor of the RBI, launched the pilot program on April 11, 2016, in Mumbai. Beginning on August 25, 2016, banks have begun to submit their UPI-enabled apps to the Google Play store.
How the UPI Operates?
To facilitate seamless settlement across accounts, UPI makes use of already-existing systems like Immediate Payment Service (IMPS) and Aadhaar Enabled Payment System (AEPS). It enables push (pay) and pull (receive) transactions, supports barcode or over-the-counter payments, and can handle several recurring payments like utility bills, tuition, and other subscriptions.
The technology enables mobile payments to be delivered without the use of credit or debit cards, net banking, or the requirement to enter account details once a single identification is established. Connecting people who have bank accounts via cell phones, would not only increase the security of critical information but also enable frictionless transactions.
Comparing: Sending and Receiving Money
On the UPI, sending money is referred to as "pushing." The user logs into the interface and chooses the Send Money/Payment option to send money. He selects the account from which the funds will be debited after inputting the necessary amount and the recipient's virtual ID. After entering a unique personal identification number (PIN), the user is given a confirmation.
A "pull" is when money comes through the system. The user chooses the option to collect money after logging into the system. The amount to be collected, the virtual ID for the remitter, and the account where she will deposit the monies must all be entered at this point. The payer is then sent a message asking for payment. If he chooses to proceed with the payment, he enters his UPI PIN to approve the deal.
Both the sender and the recipient receive a text message confirmation on their smartphones after the transfer has been completed.
Benefits of UPI
For Banks: There is a single click, universal application for one transaction. Two-step verification. It is more secure and safe. It makes transactions simple. Unique Identifier Basis for Payment Single.
For Merchants: Fund collection is simpler. The virtual address of the consumer is not at risk. This works for both m-Commerce and e-commerce transactions. Customers of Tap do not require credit or debit cards. In-App Purchases (IAP) as it eliminates the inconvenience of cash on delivery.
For Customers: One application can access many bank accounts. There is constant accessibility. From the smartphone app, you can easily file a complaint. Utilizing Virtual ID safely
What is Special About UPI?
These characteristics make UPI a very distinctive platform:
One mobile app can be used to access multiple bank accounts. It makes instant money transfers via mobile devices possible around-the-clock. For any type of "Pull & Push," the customer's virtual address provides security. No card number, IFSC code, or account number needs to be entered by the customer. There is two-factor authentication available with only one click. Consistent with regulatory requirements and offering a simple one-click payment. avoids the inconvenience of receiving payment in cash or even travelling to an ATM.
It's simple to split the cost of living with pals. Utility bill payments, over-the-counter payments, and barcode (Scan and Pay) based payments can all be made.
With just one app, you can pay a merchant, or you can use in-app purchases. From the mobile app, you may easily file complaints. Donations, payments, and collections are all simple processes.
UPI Transaction:
- Sending money using a virtual address is known as a "PUSH transaction."
- Login to UPI app by the user
- selects a payment option
- The sender inserts the recipient's virtual address and the transmitted amount.
- To authorize the transaction, the user enters a PIN.
- To pull a deal is to ask for money.
- The UPI application's users log in.
- He or she chooses options for money collection.
- The user enters the virtual payer ID, the credit amount, and the recipient account.
- Payer receives notification when money is requested.
- After carefully considering the request, the payer selects accept or deny.
- The bank will notify the user and payer following a successful transaction.
Bottom Line
Payments are now unquestionably simpler than they were before. Thanks to the UPI app. With the help of such an app, we may state that we are gradually advancing toward the cashless economy and digitization, which would enable us to achieve our objectives.
Written by: Jay Kumar Gupta
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