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What is upi and How does it work?

By September 19, 2022 No Comments

What is Unified payment interface?

A single window allows you to transfer money between bank accounts through the unified payment interface, or UPI. This means that you can shop, pay bills, or authorize payments by sending or receiving money or by scanning a quick response (QR) code to pay a person, a business, or a service provider.

All you need to allow mobile payments is a mobile payment application and the payee’s virtual address, for example fullname@xyzbank. This suggests that payments can be made in a single step directly to a vendor’s or a person’s accounts. There is no repetitive step involved. For instance, entering your bank account information or other sensitive data every time you need to make a payment. Today IPB one of the best banking training institute will let you know more about what is UPI and how does it work

How Do UPI Transactions Work?

With the use of the Unified Payments Interface (UPI), customers can link several bank accounts in a single smartphone app and send money without giving their IFSC or account numbers.

In this real-time payment system, money are instantly credited in real-time.

How does UPI work?

To complete any transaction, the user will just need to use a virtual address known as a Virtual Payment Address (VPA). The National Payments Corporation of India (NPCI) created UPI, and the Reserve Bank of India oversees its operation (RBI). Universal payment interface is steadily overtaking other digital payment methods as the most popular one. To transfer money using UPI, the following factors are necessary:

  • A smart phone
  • An active bank account.
  • Both the mobile phone and the active bank account must be connected.
  • Internet access

UPI is steadily overtaking other digital payment methods as the most popular one. Most banks and numerous digital wallets can use the UPI interface, and payment applications are embracing it. The apps include Google Tez, Paytm, and PhonePe, among others.

Apps with UPI Features in India

Below is the list of App that provides UPI Feature:

  • PhonePe
  • Paytm
  • BHIM app
  • MobiKwik
  • Google Tez
  • Uber
  • Paytm Payments Bank
  • SBI Pay
  • iMobile
  • Axis Pay
  • BOB UPI

Who initiated Unified payment interface?

The National Payments Corporation of India (NPCI), in collaboration with the Reserve Bank of India and the Indian Banks Association, launched the UPI program (IBA).

The company that manages the RuPay payment infrastructure is called NPCI, and it functions similarly to MasterCard and Visa. It makes it possible for different banks to connect and transfer money.

A further project of the NPCI is the Immediate Payments Service (IMPS). Nowadays, UPI is viewed as an improved IMPS function.

Upcoming features of UPI

  • Transactions using Pre-Authorization

Paying your bills late might occasionally result in penalties and extra stress. One can pre-authorize the UPI app to withdraw money from the bank account in advance of the due dates for the selected items. For EMIs and other bill payments, this method would also be functional. One might easily adjust according to their needs and limit the automatic payments monthly.

  • Authentication via a biometric

The UPI app is planned to be “smarter,” much like how your smartphone unlocks itself using your fingerprint. Phones that can take high-quality iris scans or fingerprint photographs can use this technique. The MPIN would no longer be required during UPI money transactions thanks to biometric authentication.

  • Error Resolve

The UPI currently shows an issue if the same mobile number is connected to several bank accounts This issue would be fixed in the upcoming UPI release.

  • Verify the transaction’s speed

UPI 2.0 is looking to add velocity checks for UPI transactions.  These controls are in place to ensure that fraudulent transactions may be identified and, ideally, stopped before they can be completed. Several banks in India already utilize velocity checks to increase security. This functionality would considerably improve UPI 2.0’s dependability. The Unified payment interface app allows users to notify the bank and the customer of a questionable transaction.

  • Planned Payment

The Universal payment interface payment system does not currently offer the ability to schedule payments. But UPI 2.0 is going to have this feature, giving the current system the much-needed flexibility.

  • Payments Based on Aadhaar

Aadhaar numbers would be used for payments starting with UPI 2.0. Unlike mobile numbers, which may have been owned by several people before you, an Aadhaar number is more specific to a single person. Additionally, a number of banks have begun connecting accounts to the Aadhar of account holders, making it simpler to conduct transactions directly from bank accounts.

  • Payment of bills

Currently, users can send money to someone who has a bank account using the UPI system. However, UPI 2.0 claims to provide the ability to pay utility bills through the UPI app. This software allows for the payment of bills at any time and location, including those for power, telephone, insurance, mobile, credit cards, and even EMI collection. According to recent sources, two banks plan to introduce the feature very soon. To make bill payments easier, UPI will incorporate the Bharat Bill Payment System.