We have been hearing about the Unified Payments Interface are UPI for quite some time now, and finally, the National Payments Corporation of India announced the launch of the service yesterday. It was online yesterday itself and is currently available for 21 banks. So now will discuss in details about how to get the app to use UPI, how it will change the way India makes payments and why it is important for progress.
What is UPI and how does it work?
- UBI is a payment solution where a bank customer can directly transfer funds via a virtual payment address. This transaction is verified by a single click two-factor authentication. The virtual payment address that is used in this process acts as the identifier or symbol to send or receive money. In simple and straightforward words, this process will disregard the system of adding a beneficiary and making account numbers available to people who will receive or send money to someone else.
- This system was in a trial mode from April, when Raghuram Rajan first announced this system as a path-breaking way to make progress in India’s economic steps forward. It was available for all RBI employees so that they could provide feedback about the chinks and the advantages of using this app. Since it has received largely positive reviews, the RBI has decided to go ahead with its plan to revolutionize payments online.
- As previously mentioned, the current requirements of adding and individual’s name, their bank account number, and IFSC code is going to be discarded. When UPI is functional for a user’s bank as well as the bank of the second party who will be receiving or sending the money, the information will not be required. A unique ID will be generated for every user of every bank and users will have to use that ID only in order to make transactions. The system will also be available 24 hours so that sending or receiving money is not a headache anymore.
- UPI will not be available as an app on the Google Play Store, contrary to what people’s perceptions are. The UPI system will be integrated into the bank app of every individual bank such that customers of every Bank have to download the official app of that Bank in order to get access to UPI. As soon as the bank app updates itself to become UPI-enabled, the customer or the user will be able to use this mechanism.
Which banks are already UPI-enabled?
The NPCI has decided to allow only those banks which had more than 1000 customers, 5000 transactions, and an 80% success rate during the pilot run of the UPI so that the bank so do not qualify might come back with better integration and software. Some banks, though, have qualified already and are UPI-enabled like Axis Bank, Bank of Maharashtra, Bhartiya Mahila Bank, Andhra Bank, Vijaya Bank, and the Union Bank of India, among others.
How is UPI beneficial?
UPI make payments hassle free and in these times when cyber crimes and credit card frauds and online hacking are rampant, it is a very secure process because it does not involve the getting out of sensitive account details. The two-step authentication process also provides an added layer of security. UPI also makes payment fast because it does not involve providing lengthy information about card numbers, the CVV code, or even expiry dates. With time, it has been announced; UPI will also enable the bank apps to pay instantaneously during cash-on-delivery transactions, while paying utility bills and while making other such monthly payments.
If you still have not understood how UPI will work:
If you are still a bit hazy on what this process is actually all about then, I will try to explain this to you on the basis of perspective.
- I hope you know about NEFT. Now NEFT needs a bank account number and then IFSC code for sending or receiving money. Both the sender and the receiver must have valid bank account numbers and also have net banking activated on these accounts. If all these requirements are met then money can be transferred from one account to another but it takes an hour or so to complete the whole process.
- IMPS is something that you must have heard about. This process is same is NEFT with the only essential difference being this one is actually much faster in transferring the money and also needs a unique code and the mobile number of the person to whom the money will be transferred.
- Now UPI matches the speed of IMPS in transferring the money, but it does not mandatorily require a bank account. It is like a virtual wallet where you can keep the money for transfer to somebody or your bank account.
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