The solution to most banking problems such as failed or delayed fund transfers and the ability to access information quickly lies in automation and digitisation of various banking processes. Opening a wide number banking channels can be helpful but only to an extent. UPI or the Unified Payments Interface is one among a host of various new advancements and solutions for modernising banking in India. It has the capacity to facilitate real-time fund transfers, arguably the most-used service provided by Indian banks.
Millions of people send and receive money through traditional banking channels every day. This consumes a lot of time and effort on both sides. People have to fill deposit and transfer slips before waiting in long queues before they can get the bank personnel to make the manual entries to get the job done. With UPI, this process takes just a few seconds. You can transfer money instantly to without any delays.
What is UPI?
UPI is designed for modern mobile phone users. It cannot be used on any other platform, say a laptop. In practice, it is a real-time money transfer service facilitated by the National Payments Corporation of India (NPCI). The service works around the clock regardless of bank or national holidays. It utilises a Virtual Private Address (VPA), assigned to each user, to facilitate transfers using the IMPS (Immediate Payment Service) platform to transfer money from one account to another. This allows UPI to be extremely user-friendly – the only information required to transfer funds is the receiver’s phone number or the VPA.
How UPI Works?
First, you need a UPI mobile app. This could be provided by your own bank but there are universal UPI apps available as well. A universal UPI app called BHIM (Bharat Interface for Money) is developed and promoted by the Indian government and works for every customer regardless of the individual’s bank. The only condition for using UPI is that your bank must be a partner in the initiative. Banks that have their own apps for UPI are called Payment Service Providers (PSP). Banks that use 3rd party apps are called issuers. The latest list is maintained at www.npci.org.in/upi-live-members. 66 public sector and private sector banks are already listed as PSPs and issuers in the initiative.
How to Generate UPI PIN:
To generate your UPI PIN, you need to register your bank account for the service first. You can follow these steps to do so:
- Downloaded and open a UPI app of your choice. The app will first ask for your mobile number that is registered with your account. While it is not required, the process is much easier if you install the app in the phone that is using the SIM card with your registered mobile number.
- The app will then send a message to the bank from your registered mobile number for verification. Be sure to give the app the permission to do so if prompted. Once your mobile number is verified, the app will automatically fetch the necessary bank details.
- Next, you will have to create your unique UPI ID and UPI PIN. Your UPI ID is the VPA through which you will send and receive money. The VPA is similar to an email id and has two parts. First part is for you to decide that can be your name or anything you want and the second part identifies the PSP (the bank) and is non-customisable. An example of a VPA would be 12345678@upi. You can set any VPA you want as long as the ID is available. No two bank accounts can have a same VPA. However, it is possible for a single account to have multiple VPAs generated using different UPI apps.
- The app will now prompt you to set up your UPI PIN. Just like an ATM PIN, this is a safety feature that you need to enter before every transaction. With a strong UPI PIN, the app will be able to protect your account and no one can transfer funds without your authorisation. This is a 4 or 6-digit PIN that you can set as any combination of numbers. However, it is suggested not to set the same number as your ATM PIN or other easy-to-guess information such as your birthday or marriage anniversary.
Benefits of UPI
UPI comes with a number of benefits. Some of the important ones are briefly discussed here.
- You do not have to input any confidential data or even other hard-to-remember information such as the account number, IFS code, etc. You just need to enter the registered mobile phone number or VPA of the receiver and you can proceed with the transfer of funds. This facilitates a secure transaction between the parties as there is no chance of hacking and information misuse. UPI has a daily limit of Re. 10,000 per transaction, 5 times a day. Some banks allow you to transfer a total sum of Rs. 1 lakh within a day in five separate transactions.
- UPI also allows you to request funds from others who are using UPI. You can find this function in the request money section of the app. You have to enter the VPA of the person you are requesting funds from. The app will send a notification to the person and you will receive the amount if and when the person approves the request to send you money. You can do the same by generating a QR code as well.
- In addition, you can pay for online shopping through UPI. When paying for your purchases, you have to select the option of ‘Payment through UPI.’ Many shopping websites use UPI’s request money facility to receive payments through UPI. You will receive a notification for the payment and you can then approve it. This function works on cash on delivery (COD) purchases as well.