Unified Payments Interface (UPI) is an instant fund transfer scheme introduced by the Reserve Bank of India (RBI). The developer of this fund transfer system is National Payments Corporation of India (NPCI), which has developed UPI so that the nationwide customers can benefit from this service. Just like IMPS, you can instantaneously transfer money between two bank accounts using the UPI platform.
On 11th April 2016, the UPI scheme was launched in Mumbai by the RBI Governor, Dr. Raghuram G Rajan. Only 21 bank branches were chosen for the pilot run of this new fund transfer system. However, at a steady pace, various banks across the country started implementing this service through the merger of UPI features in their already existing mobile banking apps. The most striking feature about UPI is that it allows you to merge multiple bank accounts into a single mobile application. This feature allows you to transfer funds, make merchant payments, etc., through a single fund transfer mobile application.
Features of UPI
UPI transactions have acquired quick fame in India and are available to a huge population through different banking applications, which are compatible with all the smartphones. Different banks such as HDFC Bank, ICICI Bank, etc., have introduced their personal UPI-enabled apps to assist you in a more convenient way. This money transfer system is loaded with several special features that position it a step ahead of IMPS, NEFT or RTGS fund transfer systems. Let us check the prime features & benefits of UPI:
- UPI offers instant money transfer via mobile device 24×7 for all 365 days
- It only requires a single mobile application for managing various bank accounts
- A single click payment makes the UPI system quite attractive
- For initiating UPI transactions, your Virtual Payment Address (VPA) is the chief requirement. Details such as card number, account number, IFSC code, etc., are not required
- You can carry out merchant payment through a single mobile
- Complaints and queries can be requested through the mobile application
- Bill sharing option is also available under the UPI model
How to Transfer Funds through UPI?
To successfully initiate a UPI transaction, one must know the required steps. The steps to initiate a UPI transaction might slightly vary from one bank’s mobile application to another. ICICI Bank has its mobile app, Pockets, which supports the UPI fund transfer system. Let us see how one can initiate/accept a payment request through Pockets.
Initiate a Payment Request
- Log in to the Pockets app and click on ‘UPI’
- Further, click on ‘Send Money using VPA (UPI)’
- Add the required details such as the amount and remarks
- In case you have multiple bank accounts/virtual payment addresses linked to the mobile application, then it is necessary to select a particular VPA from which you want the amount to debit. Once this is done, click on ‘Submit’.
- Cross-check the details and click on ‘Confirm’ for initiating fund transfer
Accept a Payment Request
- You would be notified when a payment has to be collected via UPI
- You need to login to Pockets and go to the UPI section
- Select ‘Respond to Collect Request’
- Make sure you review the person/merchant’s collect request before finally accepting it and also select the VPA from which the payment has to be made
- If you have chosen an account managed within the same bank (in this case ICICI), the amount will be debited immediately after you click on ‘Confirm’. However, if you choose another bank account, here you will be prompted to type the UPI PIN of that bank account. It is basically the MPIN that you have set during the registration of your account in Pockets
- After the submission of these details along with the verification, the concerned fund will be transferred immediately to the beneficiary
UPI Transaction Cost
- The Unified Payments Interface or UPI is regarded as a capable fund transfer system managed under a secure online arrangement. However, for accessing this service there is a certain fee that you would be required to pay
- What is the UPI transaction charge? Many people are asking this question as there is no solid statement available on the internet which reveals the exact transaction fee for UPI. Also, since IMPS, RTGS and NEFT do ask for a transaction fee, it becomes more important to know about the charges which UPI demands for making fund transfer
- Presently, UPI is completely free of cost. But NPCI indicated that UPI service might be chargeable in the coming future. NPCI can charge a nominal amount for making fund transfer using UPI
Benefits of UPI
- Free Money Transfer Option
The UPI transaction system is indeed the cheapest. Considering the NEFT, RTGS and IMPS are chargeable, the UPI charge is free for a transaction. Hence, due to its low cost, this fund transfer scheme holds the potential to encourage non-cash transactions for smaller fund values.
- Free from Cash
Since the past decade, cash transactions have been reduced with the availability of several online banking methods. Be it card payment, net banking or mobile wallets, you are offered great ease to send/receive money. However, the utilization of cards or net banking for making smaller transactions such as grocery bills are not that frequent. This is where UPI proves beneficial as well as feasible. Moreover, these smooth and low-cost transactions have made it feasible for both the sender and the receiver.
- Lesser Details
The only reason why many people avoid using online transaction or card payment is due to the filing process of bank account details. In order to make card transactions, you give card number, CVV number, and validity period. On the other hand for a net banking transaction, you need to enter bank account details such as bank account number and IFSC. But with the availability of UPI at your fingertips, the payments requested do not necessarily require any card or bank account details. The primary requirement is only the Virtual Payment Address (VPA).
- Ensured Security
The UPI fund transfer system minimizes the risk of fraud or details getting lost as UPI transactions do not involve any sharing of bank account details. Moreover, there is no requirement to present your credit card number, CVV, etc. Everything is managed through VPA that doesn’t offer any clue about your bank account.
Hence, you can feel free to use UPI without worrying about any type of information loss. There is no fear that someone can overlook your PIN while to enter, like ATM PIN, since this code is not linked to your bank account.
- Opt Any UPI App
You also get the leverage to choose any UPI-based app for making fund transfers. There are no such guidelines, which make it mandatory to select apps promoted by a particular bank. In simple terms, if you hold a bank account with ICICI Bank, there is no issue if you use any other UPI app like Google Pay. However, before you start using an app, always check the interface along with its functionality.