UPI, which stands for Unified Payments Interface, is the ultimate technology that works through a UPI-enabled smartphone application for real-time digital payments, allowing you to send and receive money, make instant bill payments, and authorize transactions on a single application in a few steps like scan → pin → pay.
Earlier Users had to make payments through NEFT or RTGS like conventional methods. It takes some hours to a day to transfer money from one account to another. There was a need for some technology by which these hectic payment processes could be replaced, Then UPI came into the picture, UPI is a game changer technology, UPI Users can check account balances, manage multiple bank accounts, and transact through various payment methods without the need to carry debit or credit cards.
UPI works on a highly secure, multi-layered architecture with multiple levels of encryption, ensuring the confidentiality and integrity of data during transactions.
Let’s understand the functionality, features, and works of UPI -
Unified Payments Interface (UPI) - what is a UPI interface?
Unified Payments Interface (UPI) is a real-time payment system in India that enables seamless money transfers from one bank account to another instantly and free of charge through a mobile device. Now other countries also trying to use UPI technologies in their country. They asked the Indian government and leading UPI interface-providing companies of India to implement it in their respective country.
In simple language, we can say that the UPI interface is an ecosystem that provides users the capability to access multiple bank accounts through a single mobile application, It gives the ability to users multiple banking features and, an easy payment process from customer to merchant and vice versa.
Users can transfer money to each other with the help of a unique UPI ID or a Virtual Payment Address (VPA). Users can also transfer money by selecting the receiver’s contact from their phone book, entering the receiver’s contact number, or scanning a QR code.
UPI's instant payment process feature makes it easy to transfer funds between individuals and businesses, enabling individuals to make online purchases, pay utility bills, and shop at vegetable shop-to-cloth showroom stores through QR codes, VPAs, or UPI-registered mobile numbers.
UPI - Benefits to the Ecosystem participants
Unified Payments Interface offers digital payments, offering instant, secure, and cost-effective transactions for consumers, businesses, and banks and drives economic growth across the ecosystem.
Bank -- One-click Two Factor authentication
- Universal Application for transaction
- Leveraging existing infrastructure
- Safer, Secure, and Innovative
- Payment basis Single/ Unique Identifier
- Enable seamless merchant transactions
- Round-the-clock availability
- Single Application for accessing different bank accounts
- The use of Virtual ID is more secure, with no credential sharing
- Single click authentication
- Raise Complaint from Mobile App directly
- Seamless fund collection from customers - single identifiers
- No risk of storing the customer’s virtual address like in Cards
- Tap customers not have credit/debit cards
- Suitable for e-Com & m-Com transaction
- Resolves the COD collection problem
- Single click 2FA facility to the customer - seamless Pull
- In-App Payments (IAP)
How to do registration and use UPI? - Steps for Registration
- Users can download UPI applications from different providers from the App Store or Banks' official websites.
- Users Create their account/profile by entering basic mandatory details like name, virtual ID (payment address), password, pin, etc.
- Users have to go to the “Add/Link/Manage Bank Account” option and link the bank account number with their virtual ID (UPI ID)
UPI can be accessed on all platforms viz. Android / iOS – The Apps have been developed by members on Android 4.2.2 and above/iOS 8.1 and above platforms.
How to Generate Unique UPI – PIN:
The user selects the bank account from which he/she wants to initiate the transaction The user clicks one of the options -
Change UPI PIN -- The user receives OTP from the Issuer bank on his/her registered mobile number
- The user now enters the last 6 digits of the Debit card number and the expiry date
- The user enters OTP and enters his preferred numeric UPI PIN( UPI PIN that he would like to set) and clicks on Submit
- After clicking submit, a customer gets a notification (successful or declined)
- The user enters his old UPI PIN and preferred new UPI PIN (UPI PIN that he would like to set) and clicks on Submit
- After clicking submit, a customer gets a notification (successful or failure)
How Internally does a UPI Transaction work?
UPI transactions involve two types, Push (Send Money) and Pull (Request Money). In Push, users send money by entering the payee's virtual ID, and amount, and confirming with their UPI PIN. In Pull, users request money, and the payer authorizes the transaction by approving the request and entering their UPI PIN.
Push Transaction - Send Money- The user logs in to the UPI application
- After successful login, a user selects the option of Send Money/Payment
- The user enters the beneficiary’s/Payee's virtual ID, and amount and selects the account to be debited
- The user gets a confirmation screen to review the payment details and clicks on Confirm
- The user now enters the UPI PIN
- The user gets a successful or failure message
Pull Transaction - Request for Money
- The user logs in to his bank’s UPI application
- After successful login, a user selects the option of collecting money (request for payment)
- The user enters remitters/payers' virtual ID, amount and account to be credited
- The user gets a confirmation screen to review the payment details and clicks on Confirm
- The payer will get a notification on his mobile to request money
- Payer now clicks on the notification and opens his bank UPI app where he reviews payment request
- The payer then decides to click on accept or decline
- In case of accepting payment, the payer will enter UPI PIN to authorize the transaction
- Transaction complete, payer gets successful or declines transaction notification
- The payee/requester gets a notification and SMS from the bank for credit to his bank account
- Pay Request: When you send money to someone using their Mobile Number & MMID, Account Number & IFSC, or Virtual ID.
- Collect Request: When you request funds from someone using your Virtual ID.
Non-Financial Transactions: UPI also supports non-financial actions like mobile banking registration, generating OTPs, setting/changing PINs, checking transaction status, and raising disputes or queries.
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