Unified Payments Interface (UPI)

Besides being a convenient payment tool, Unified Payments Interface (UPI) is revolutionising financial inclusion. It offers a simple and accessible solution for making transactions, even to those individuals without a traditional bank account using UPI wallets. Furthermore, it facilitates payments globally, too. UPI India has expanded across borders in countries like Singapore, France and the UAE. That’s why it’s crucial to understand how UPI works and how you can maximise its benefits. 

Features of Unified Payments Interface (UPI) 

Unified Payment Interface (UPI) was developed by the National Payments Corporation of India (NPCI) in 2016. This institution is regulated by the Reserve Bank of India (RBI) and Indian Banks Association (IBA). As of August 2024, UPI India has more than 400 million users. The increased adoption is due to its exceptional features, which are:

• The transactions made through UPI are completely free. 
• UPI is secured with two-factor authentication. 
• UPI masks your bank details, instead uses virtual payment address (VPA) or QR code for enhanced security. 
• Easily access UPI services through various apps. 
• UPI allows you to send and request money  
• Making instant transfers is simple with UPI, be it to a person or merchant. 
• You can set up auto payments for recurring transactions. 
• Allows you to link your credit card.

How does UPI work? 

Setup:  

In this stage, you need to download a UPI-enabled app, register using a mobile number, create a Virtual Payment Address (VPA) and set a UPI PIN for authorisation.

Initiating Transactions:  

Now, to send money, you can select the 'Send Money' option, enter the recipient's VPA, mobile number or scan a QR code. To confirm the transaction, you will have to enter your UPI PIN. And for receiving money, you can provide your VPA to the sender​.

Processing:  

National Payments Corporation of India (NPCI) then acts as a central hub, routing transaction requests between the payer and receiver. It ensures real-time processing​.

Security:  

UPI uses two-factor authentication (mobile verification and UPI PIN). This ensures transactions are more secure.

Real-time Settlement:  

After authorisation, the transaction is completed instantly, with immediate debiting and crediting of the respective accounts​.  

Uses of Unified Payments Interface (UPI) 

Benefits of Unified Payments Interface (UPI) 

For merchants 

• No need to store sensitive customer details. 
• Allows to reach customers who don’t possess a debit or credit card. 
• Facilitates smooth payment processing within mobile apps. 
• Eases collection of payments for cash-on-delivery orders without handling cash. 

For individuals

• Available 24/7, including nights and holidays. 
• One app lets you manage all your bank accounts. 
• Uses a virtual ID, so you don’t need to share your bank details. 
• Approve payments with just one click. 
• Raise complaints directly through the app.

Steps to generate UPI PIN 

• Open your UPI app and go to the ‘Bank Account’ section. 
• Select the bank account for which you want to set a UPI PIN. 
• Enter the last six digits of your debit card and its expiry date. 
• You will receive an OTP on your registered mobile number. 
• Enter the OTP in the app. 
• Set a 4- or 6-digit UPI PIN and confirm it.

Steps to change UPI PIN 

• Open the UPI app and go to the ‘Bank Account’ section. 
• Select the account for which you want to change the UPI PIN. 
• Choose the option to ‘Change UPI PIN’ or ‘Reset UPI PIN.’ 
• Enter your existing UPI PIN for verification. 
• Enter the last six digits of your debit card and its expiry date. 
• Enter the OTP received on your registered mobile number. 
• Set a new UPI PIN and confirm it.

Endnote  

By using UPI, you don’t need to carry cash, reducing the risk of theft or loss. You can avoid the hassle of writing and depositing cheques. There’s no need to visit banks or ATMs for your transactions. All you need is your smartphone. So, register for UPI on Kotak811 mobile app and transfer in a simple, safe and convenient way.