With the demonetization of 500 and 1000 notes, our honourable PM, Modiji has pushed everyone to go cashless and embrace Digital India with a lot more urgency than before. To enable the transition to Digital India, National Payments Corporation of India’s (NPCI), set up with the support of the Reserve Bank of India and Indian Banks Association (IBA) has introduced Unified Payment Interface (UPI), which is expected to be a game-changer for our economy and is slated to revolutionise the way the payments are handled today.
Let us understand what UPI is all about and how we can benefit from using it in our day-to-day transactions.
United Payment Interface – What is it and How can it be useful to us?
Today when money has to be transferred or a payment to be made, we need to use a Debit Card or Credit Card for purchases or for payments, we do a NEFT transfer from our Bank’s portal or use a mobile wallet like Mobikwik or Paytm. UPI makes it much easier by creating a virtual payment address called UPI ID using your mobile number or Aadhaar number linked to your bank account number. Using UPI, one can transfer funds between two parties using each others UPI ID without requiring to know the bank account details.
Let us see in greater detail how this works
How to create your UPI ID or VPA ?
1. The first step in the process is to download your Bank’s UPI App on an Android smartphone for e.g. Pockets App of ICICI Bank has UPI as part of it. As of 23rd November 2016, the list of banks that have embraced UPI is given below. SBI and HDFC are in the process of getting onto the UPI platform shortly.
2. Open the UPI App and enter your mobile number and create a 4-digit PIN. Everytime money has to be transferred this PIN would be used and so memorise it.
3. Create a Virtual Payment Address or UPI ID that uniquely identifies your account. For e.g. albie@icicibank or 9840020099@pockets. You can send and receive funds using this UPI ID. This UPI ID essentially becomes your virtual debit card or email id for your money.
4. Once UPI ID is created, it needs to be linked to your bank account. This is facilitated by the UPI App on your phone.
Once the above steps are completed, you are all set to receive, send money on your mobile phone.
How to Send Money?
Open the UPI App on your phone. Choose Send Money option. Specify the receiver’s VPA ID, the amount to be transferred and remarks. Check once and confirm the transaction. The amount will be transferred immediately to the receiver subject to availability of funds in your account.
How to Collect Money?
Open the UPI App on your phone. Choose Collect Money option. Specify the VPA ID of the person from whom you want to collect money, amount to be collected and remarks. Once sent, the receiver would get notified on his UPI App and by SMS about the request that you have initiated. On approval, the money would get transferred to your bank account and you would receive a notification on your UPI App.
How secure is UPI?
The security is absolutely fool-proof as the transaction happens in a highly encrypted format. Also, 2 Factor authentication – similar to OTP will be used as mandated by RBI. In this case, MPIN instead of OTP will be used.
How much do I pay for using the UPI?
NCPI has indicated that they will charge Rs. 0.50 (Fifty Paise) per transaction. On your bank statement, it will appear as IMPS transaction.
Major Benefits of United Payment Interface
1. Payments can be made or received just giving the UPI ID. For instance, you may ride in an Auto and the Auto driver can request money by asking money from his UPI App quoting your UPI ID. Once you approve the payment, the driver gets money into the account.
2. UPI works round the clock. Unlike NEFT there are no fixed timings.
3. The transaction fee is amongst the lowest.
From now to transfer money, don’t ask for Bank account details, instead ask for UPI ID. UptoRs. 1 Lakh can be transferred using UPI.
Photo Credits: Reddit