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Saturday, December 03, 2016

UPI - the future of transactions

Welcome to the future of transactions. Welcome to Unified Payment Interface (UPI). Know more about it, and get into it as soon as you can...

What is UPI
UPI is short for Unified Payment Interface. As the name suggests, it is a single unified interface for making or receiving payments online. 

Why was UPI needed
Net banking is not as efficient and quick. Net banking was made for the internet; to make it secure. However, the extra steps required made the whole process of transferring money cumbersome, even with IMPS. UPI takes away a lot of friction. It makes money transfer - across banks - seamless, quick and instant.

How is it different from net banking
You need to buy from your local shop or local supermarket. You do not want to pay cash or debit / credit card. You are ready to go for Net Banking but you may not want to take a note of their bank details, add and confirm them as beneficiary, and then log into your net banking or mobile banking app each time you buy something, where you would need to wait for OTP and provide information like those grid numbers on the back of your debit card. That’s just too much of work when all you have bought is a box of chips and some cold drinks.

How is it different from mobile wallets
Actually, there is no direct comparison between UPI and Wallets. Mobile wallets like PayTM, Freecharge, Mobikwik etc. are mobile based applications (apps) that hold your money. With a Wallet, you add money from your bank account using net banking or bank cards. So, these wallets act as a 3rd party. And if you were registered on multiple wallets, you got to hold some money in each of these wallets. On the other hand, the UPI app transfers money from one bank account directly into the other just like netbanking IMPS transfer, there is no need for 3rd part apps to hold the your money anymore.

What gives UPI an edge
1) Instant money transfer to anyone (No registrations of payee etc.)
2) Available 24×7, including on holidays.
3) No need to hold your money with any 3rd party.

Prerequisites to start using UPI
1) You need to have a bank account with enabled netbanking and mobile banking i.e. if you have generated an MPIN - (usually 4 to 6 digit long depending on the bank) for your account.
2) You need a phone number, where you are going to install this app. This number must be linked to at least one such bank account.

Where can I get this UPI app
There are about 28 different apps on Google Play (Android apps store) alone. You can search for “Your_Bankname UPI” (e.g. ICICI UPI) to find a UPI app by your bank. I have installed TruPay, which is Yes Bank's UPI app. 
The beauty of UPI is that you don’t need to use your own bank’s apps if they have not yet come up with one. You can use any of those official and trusted apps that show up when you search for UPI apps.
Unfortunately, not many official apps are available for iOS yet. TrupayIndia app can be used to receive money so far. So Apple users will have to wait till banks come out with iOS versions.

How to start using the UPI App
Once you download a UPI app, it will ask you to verify your phone number by sending and receiving SMS. In the next step you provide basic details like name, email, and set a 4 digit Pin.

How to transact with UPI
Step 1: Download and install a UPI app
Pick any of the apps when you search for UPI apps in app stores. I have been successfully using the TruPay app from Yes Bank. I found this to be very simple in use. Other good app is ICICI Pockets. 

Step 2: Launch app and register yourself
First verify your number. UPI system populates your bank account details and authenticates using phone number linked with your bank account. So install on phone with the number linked to your bank account only.
After number is verified, provide some basic details like Name and Email, and set a 4 digit password (Pin). This 4 digit PIN is for only accessing the UPI app and not for doing transactions. If you ever forget your Pin, which you need for logging into the UPI app every time you use it, you’ll need access to your email to recover it.

Step 3: Create your virtual handle aka UPI Username aka VPA
Just like your email, your UPI virtual password address (VPA) is your UPI ID which others will use to send you money. It’s of the form myupi@yesbank or yurupi@icici (no .com needed). 
You need to get innovative and think of a VPA handle name here. Pick something easy to remember and spell out. Doesn’t have to be your name necessarily, though mine is based on my name. As an example, my virtual handle is manojarora@yesbank
Once the virtual handle is created, it is permanently linked to your mobile number. It cannot be deleted later (as yet), so be careful with your selection.
VPA is not case sensitive so MyUPI@ybl is same as myupi@ybl

Step 4: Attach bank account(s)
Now that you have a VPA or a virtual handle to your mobile phone, you can start attaching one or more bank accounts (of any nationalised bank) to your VPA handle. Yes, it is not necessary that if you have downloaded, lets say, Yes Bank's UPI app, you can only transfer money from / to my Yes Bank account. Even though your VPA handle may make you feel like that (e.g. manojarora@yesbank), but that is just a universal handle (and hence the name UPI). 
I can link as many bank accounts to this VPA handle. The only condition is that this mobile number on which you are working, and whose VPA handle you have created, should be the registered mobile number with the bank you are trying to attach.
When you go to 'Bank Accounts' menu in your UPI app and press 'Add Bank Account' button, you will get a choice to select your bank. When you select your bank, the app will load all bank accounts that you hold with the bank (linked to this registered mobile number). Your bank account linked with this phone number will be added without you needing to enter anything such as account number. You can add more than one account if you have multiple bank accounts linked to the same number.
If you have multiple accounts linked to your virtual handle, then you might be asked to identify the default account for debit transaction and the default account for credit transaction. You can also choose the same account for both debit as well as credit transaction.

Step 5 : Ensure you have an MPIN
For every transaction that you will perform using your UPI app, you will need the MPIN of the bank whose account you want to transact on. e.g. If I want to send some money to my friend using my UPI VPA handle, then I must know the MPIN for the account which I have defined as the debit account (in Step 4).
If you have been using your mobile for accessing your bank's mobile app, you might already have an MPIN. It is that 4 or 6 digit PIN which allows you to access the mobile app of your bank quickly without having to enter username, password etc.. Even if you do not have it, you can go to the mobile banking app and generate one right now.
Some UPI apps allow you to generate that without leaving the UPI app, like in my case of TruPay app, I do not have to leave the UPI app to generate an MPIN for my bank. You may need to enter your Debit Card details for generating an MPIN. If you have forgotten your bank MPIN, you can reset it from within the app:

Step 6 : Go and Play !
And that’s it, with your bank account linked and VPA created (linked to your mobile number), you are set to send and receive payments now. 

Performing a UPI Transaction
A. PUSH – sending money using virtual address
1) User logs in to UPI application using the 4 digit PIN
2) After successful login, user selects the option of Send Money / Payment
3) User enters beneficiary’s / Payee virtual id or his / her mobile number (Remember that the mobile number is linked to the virtual id).
4) User also enters the amount and selects account to be debited 
5) User gets confirmation screen to review the payment details and clicks on Confirm
6) User now enters MPIN
7) User gets successful or failure message

B. PULL – Requesting money
1) User logs in to his bank’s UPI application.
2) After successful login, user selects the option of collect money (request for payment)
3) User enters remitters / payers virtual id, amount and account to be credited.
4) User gets confirmation screen to review the payment details and clicks on confirm.
5) The payer will get the notification on his mobile for request money 
6) Payer now clicks on the notification and opens his banks UPI app where he / she reviews payment request.
7) Payer then decides to click on accept or decline.
8) In case of accept payment, payer will enter MPIN to authorize the transaction 
9) On Transaction complete, payer gets successful or decline transaction notification
10) Payee / requester gets notification and SMS from bank for credit of his bank account

Current limitations of UPI transactions
1) Your transaction value must be within 1 lakh rupees. For higher amount, you will have to use netbanking or traditional banking.
2) Maximum 20 transactions can be done in a span of 24 hours.
3) Transactions can only be done within India. 

Reference Sites

Quick to setup, quick to transfer money to another account. No bank account number needed, no logging in, no waiting, and no IFSC code. All you need to know is a username (called VPA or Virtual Private Address) to send money to anyone within seconds. UPI is set to revolutionise money transfer. The earlier you get into the system, the better.


Manoj Arora
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  1. Article explains UPI advantage as well as usage procedure with complete detail.This is very useful. Thanks.

  2. Thank you for sharing such great information. It has help me in finding out more detail about Upi