All About Unified Payment Interface or UPI
Indian economy has suffered great lows because of the fiat currency and black money issues. Thankfully technology today is more developed than it was in the past and therefore our government has managed to come to a solution – Unified Payment Interface or UPI.
UPI is thought of as a game changer in the Indian economic scenario. With the government’s push towards a digital economy and cashless currency transaction, the face of the fund transfer is getting a reboot already and it is all being done because of the revolution called UPI.
A Unified Payment Solution will guarantee that every penny is accounted for and that tax evasions are restricted and the fund distribution is done evenly among the rich and poor. But more on its impact later, first let us understand what UPI actually is.
So what is UPI?
In layman terms, UPI is a payments system that is geared towards providing the substantial push towards faster and efficient payments. It works just like your debit and credit card payments but the only difference is that it brings all the systems under one roof. Also payments are easier via UPI.
Since the National Payments Council of India is directly associated with this system, it doesn’t matter if your account is in the HDFC bank or Axis Bank, you can easily access all your banks via this single app. Hence, the name “Unified” – because all the banks here are interoperable.
Just like you can use any ATM of any bank to get cash, you can use this app to make payment to any vendor from any bank. Only the State Bank of India is missing from the list right now. But it is expected to join soon because this is a government initiative.
How can I start using it?
This is the question of the hour because you must learn how to start using it – there is a good chance most of the transactions will be shifted to this mode in the near future.
So the basic idea is simple – it is a payments system. You can make payments via the apps that have this system to anyone. The facility is secure and enables instant payments. Now to get started, you have to start using the apps that are enabling this feature right now. The apps which have already been in the market for quite some time and are already Beta tested are – Bharti Airtel, ICICI bank, UCO bank, Axis Bank, Andhra Bank and many more. There are total 21 banks which have enabled their own apps.
You can download any app on your Android mobile phone and get started. The best part is that you don’t have to have an account with ICICI bank to use this app. You could very well be an HDFC account holder and still use the ICICI bank UPI app. As we already said – this app is interoperable between banks.
Key facts about UPI you need to note
- You might not need an IFSC code to begin your transaction here, but you do need a bank account. You need to generate an M-Pin and a virtual address via the app and get started.
- It is a safe method because the customers no longer need to share their bank account details. They will simply share each others’ UPI address and transfer money via it.
- Among the other forms of payments, what one can necessarily do via this system is pay bills, remittances and pay while online shopping or to other merchants in the local.
- The limit per transaction is Rs. 1 lakh – which is pretty high and therefore there is a good chance that you will be able to carry out all the transactions via this app with ease.
- The transfer of money is immediate and hassle free. This does not require you to share your passwords with anyone or to generate any OTP post the verification process.
- The charges for using UPI are roughly Rs. 5 plus service tax. If you use net banking you might have to pay your bank Rs. 2.30 at present. But it is quite the same in terms.
All you need is a smartphone and a UPI address between two phones to start your payments.
Right now where can I use UPI?
There aren’t a lot of places where you can use this payments gateway right now. So you can use this to make person to person transfers easier. You can also make direct transfers to anyone’s bank account easily via this system.
However it is easy to learn to use it now because already the Aadhar Enabled Payment Systems are in place and soon they will be used across all platforms.
Major issues to note right now
- If there is a single unified platform that transfers money then implementing GST would become easier since all the transactions will be accounted for. Hence you can expect lower taxes (because of exclusion of overlapping taxes).
- Banks are of the view that by checking their transaction history they can enable the customers for credit, loans, etc.
- Everyone knows how to use a mobile phone – especially a smartphone these days and with apps rolled out of this feature, more number of people will be easily able to keep a track of their transactions.
UPI is a standalone system that will make a huge impact in the way India indulges in transaction in the very near future.