This article is very interesting especially for people who send money from one bank account to another quite frequently.
Now you can send money to anyone via a mobile banking app without knowing his or her account number.
Just imagine you simply don’t have to know the 16 digit account number of the recipient and IFSC code of the bank.
Let us see what is this all about?
What is Unified Payment Interface?
The National Payments Corporation of India (NPCI) launched Unified Payment Interface or UPI on 25 August 2016.
Unified Payment System (UPI) is a platform which will link the bank account number to a virtual payment address or alias.
In simpler words UPI is a payment system that will allow its users to transfer money between two bank accounts by using a smartphone.
However the unique thing about this system is you can transfer the money without typing the recipient’s bank account number, credit card details, IFSC code and even net banking passwords.
UPI can be used for many other things apart from just transferring money. We shall see this later in this article.
How Does UPI Works?
Before I tell you how you can get started with Unified Payment Interface, you need to know how does this particular system works.
If you have an account with one of UPI partnered bank then you can download the app on your smartphone to make transactions.
Whether the transaction is person to person or ecommerce, the receiver just has to share a virtual address or an alias like abc@icicibank or mobile-number@icicibank instead of sharing bank account number or IFSC code.
Once you download the app, create virtual payment address, set a PIN and link an account of anyone of UPI patterned bank.
Before I tell you exact step by step guide you need to know what all you can do with UPI payment system.
1. Off Course you can transfer money to your friends and relatives. Minimum transfer amount is Rs 50 and maximum is Rs 100,000/-.
2. You also don’t need bank account number and IFSC code for payments similar to Immediate Payment Service (IMPS).
3. You can also pay to Cash on Deliveries.
4. You can make transactions to merchants at physical and ecommerce stores.
5. UPI system will allow merchant cash settlement in real time.
6. Finally you can also pay utility bills and insurance premium amount with this system.
Step by Step to Get Started
Now from a beginner’s point of view let us see how you can download the app and start using it.
Step 1: You can download & install the UPI app from the Google play store or Apple Store for any UPI enabled bank. Its not necessary that you have to install bank where you have account.
Step 2: You have to login and create a VPA (virtual payment address). VPA is an alias that will be like abc@bankname or you can also use your mobile phone number as alias.
Step 3: Now add your bank account or accounts (depending upon number of bank accounts you want to add). The added bank accounts must be from 21 UPI partnered banks mentioned in next paragraph.
Step 4: Now you have to create M PIN which is basically a security code that will authenticate transfer of funds.
Step 5: You are almost done and you can start sending money via this UPI enabled app by just entering the person’s VPA.
So you just have to follow these 5 steps to get started.
Banks Associated with Unified Payment Interface
Earlier it was announced that over 36 banks has signed up to be part of UPI system.
However currently we have a list of all the 21 banks across India which has patterned with UPI system.
We are mentioning the banks in the alphabetical order.
- Andhra Bank,
- Axis Bank,
- Bank of Maharashtra,
- Bhartiya Mahila Bank,
- Canara Bank,
- Catholic Syrian Bank,
- DCB Bank,
- Federal Bank,
- ICICI Bank,
- IDBI Bank,
- TJSB Sahakari Bank,
- Oriental Bank of Commerce,
- Karnataka Bank,
- UCO Bank,
- Union Bank of India,
- United Bank of India,
- Punjab National Bank,
- RBL Bank,
- South Indian Bank,
- Vijaya Bank,
- Yes Bank
IDBI & RBL does not have their own app for UPI so you can install UPI app of other bank.
You will be surprised to know that two major banks State Bank of India (SBI) and HDFC Bank are currently still not with the UPI system.
These 2 banks and other 13 banks are expected to launch their mobile application by September 30.
Advantages of Unified Payment Interface
Here in one paragraph we mention all the salient features of UPI system.
1. Flexibility – You don’t necessarily have to use the mobile app of the bank where you have an account. You can download an app from any 21 banks. If you have an account with Yes Bank then you can download the app from ICICI bank because it has got better features.
2. UPI system will allow you to access more than one bank account in the app. Customers will have multiple virtual addresses for accounts in different banks.
3. Real time sending and receiving of money is possible through this system. The system is safe because you only share virtual address.
4. As of right now there are no charges for money you transfer. Minimum amount you can transfer is Rs 50K and maximum Rs 1L.
5. Although I have already mentioned one of the major of advantages of this system in the beginning of this article but I would like to mention it once again. You don’t need 16 digit account number or 11 digit IFSC code of the recipient for sending money. You send it via virtual ID.
Disadvantages of Unified Payment Interface
Although UPI system does not have any major disadvantages as such but there are few concerns.
First one is if your bank account is in a bank other than 21 banks patterned with UPI system then you might have to wait longer.
Secondly none of the banks are launching their apps for Apple Store.
Finally there are concerns regarding safety issues and what transactional fees will they settle for in coming days.
So let us see how UPI system a brainchild of RBI Governor Raghuram Rajan evolves in coming days.