UPI or Unified Payments Interface is a type of payment developed by the National Payment Corporation of India (NPCI). UPI has simplified the hassles involved with the transfer of money from one party to the other.
How does UPI work?
To make a UPI payment, the first step is to create an account, either on the BHIM UPI app or through the different UPI apps available. Different banks offer their versions of the UPI app which work similar to BHIM.
After creating the account, the next step is to decide a UPI ID. Traditional payments use the bank account number and the bank’s IFSC code to receive payments, which presents a security risk. With UPI, the UPI ID becomes the mode that is used to receive payments. The UPI ID can be shared with people to receive payments instead of the bank account number, and this step provides an additional layer of security.
The next step is to create a PIN. To make a UPI payment, the person making the payment needs to authenticate it with a PIN. Once this authentication is done, the amount is debited from the bank account directly.
Top benefits of using UPI:
1. Secure mode of making and receiving payments:
UPI is a very reliable mode of making and receiving payments. There is no need to share bank account details. All that is required is a UPI ID. In case the UPI ID is not available, payments can be made using the bank account number and IFSC code. Using merely the UPI ID is of no risk since the transaction does not get authenticated without the PIN. This makes the UPI safe.
2. Instant transfers:
The Unified Payments Interface works on the IMPS system. This is not dependent on the bank’s working hours. UPI works 24x7 regardless of a bank strike or holiday.
3. Integrates different bank accounts:
One of the best features of UPI is that the app allows you to incorporate different bank accounts. You can receive payments in one bank account and make payments from the other.
4. Cost effective:
UPI is a free method of fund transfer. At the moment, banks have agreed to not charge for any transfers done via UPI. The proposed charges for UPI may be around Rs. 0.5 per transaction which is much lesser than NEFT and RTGS.
5. Easy to use:
Making payments using UPI is very easy even for a layperson. The process of registration is simple and hassle-free. The user interface is clean, and the process is well explained.
How does UPI work?
To make a UPI payment, the first step is to create an account, either on the BHIM UPI app or through the different UPI apps available. Different banks offer their versions of the UPI app which work similar to BHIM.
After creating the account, the next step is to decide a UPI ID. Traditional payments use the bank account number and the bank’s IFSC code to receive payments, which presents a security risk. With UPI, the UPI ID becomes the mode that is used to receive payments. The UPI ID can be shared with people to receive payments instead of the bank account number, and this step provides an additional layer of security.
The next step is to create a PIN. To make a UPI payment, the person making the payment needs to authenticate it with a PIN. Once this authentication is done, the amount is debited from the bank account directly.
Top benefits of using UPI:
1. Secure mode of making and receiving payments:
UPI is a very reliable mode of making and receiving payments. There is no need to share bank account details. All that is required is a UPI ID. In case the UPI ID is not available, payments can be made using the bank account number and IFSC code. Using merely the UPI ID is of no risk since the transaction does not get authenticated without the PIN. This makes the UPI safe.
2. Instant transfers:
The Unified Payments Interface works on the IMPS system. This is not dependent on the bank’s working hours. UPI works 24x7 regardless of a bank strike or holiday.
3. Integrates different bank accounts:
One of the best features of UPI is that the app allows you to incorporate different bank accounts. You can receive payments in one bank account and make payments from the other.
4. Cost effective:
UPI is a free method of fund transfer. At the moment, banks have agreed to not charge for any transfers done via UPI. The proposed charges for UPI may be around Rs. 0.5 per transaction which is much lesser than NEFT and RTGS.
5. Easy to use:
Making payments using UPI is very easy even for a layperson. The process of registration is simple and hassle-free. The user interface is clean, and the process is well explained.
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