Everything about unified payment interface (UPI)

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All you want to know about unified payment interface (UPI)

So far, we have been using cheque, debit/credit cards, online banking and payment wallets to make payments. With the launch of unified payment interface (UPI) in January 2016, making payments has become much easier. The way we make any payment be it our electricity bill or DTH recharge is set to change.
What is UPI?
UPI is launched by NPCI (National Payments Corporation of India), which is the umbrella organization for all retail payments system in India. It enables all bank account holders to send and receive money from their smartphones without entering enter bank account information or net banking user id/password. This app is provided by a majority of PSU and private sector banks. Let’s look at what is UPI in detail and how does it work.
How to download UPI app?
  • You can download the UPI application from your phone’s app store or the bank website
  • After downloading the app, create your profile by entering details like name, virtual id (payment address), password etc.
  • Go to “Add/Link/Manage Bank Account” option and link the bank and account numbers with the virtual id

Let’s look at one example of how UPI can be used to make DTH payment from home:

  • Nadeem subscribes to DTH in his house and wants to make a payment for on demand subscription
  • Nadeem selects the channel and clicks “buy now”.
  • DTH shows the details along with a QR code for UPI payment.
  • Nadeem opens his UPI application on his mobile and scans the QR code on the TV screen.
  • UPI application takes him straight to pay screen with all values pre-populated from the QR code which contained the standard UPI link.
  • He verifies the info on screen and click pay to complete the payment.
  • He gets a confirmation on his mobile and the TV channel is automatically turned on for him to view. (Source: NPCI)

What is the transaction limit?

The transaction limit for UPI is Rs. 1 lakh.
How secure is it?
One of the key areas of concern among users is its security. The app provides end-to-end strong security and data protection since users don’t have to enter bank account information or net banking user id/password. For convenience, the solution also offers 1-click 2-factor authentication in order to protect data from phishing, risk scoring, etc.
Impact on mutual funds
The new payment system is expected to help the mutual fund industry receive payments swiftly. However, experts say that UPI will take some time to pick up in the MF industry.
Srikanth Meenkashi of FundsIndia says, ‘It is a great initiative by RBI. UPI is a cheap, secure, reliable, mobile-first, interoperable, open-source, instantaneous settlement and both pull and push platform. Beside the cost per transaction being low, it will indirectly help penetration of mutual funds due its reliability and two-step process.  However, the real impact will be seen in the long run.’

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