What is UPI (Unified Payment Interface)

What is Unified Payment Interface (UPI)

Transferring money from one bank to another was a big deal before NPCI (National Payments Corporation of India) facilitated the option of inter-bank transactions using mobile applications. This RBI regulated interface, termed as UPI or as UPI full form stands for- Unified Payment Interface allows users to transfer funds instantly using a mobile device. Mobile payment applications such as Paytm have made it further easy to perform UPI transactions at the comfort of your home.

You would have clearly heard the term “UPI” multiple times before, but do you know exactly what is UPI?

Let’s find out!

What is UPI?

Unified Payment Interface (UPI) is a popular mobile payment method that allows you to transfer funds from one bank account to the other, instantly and free of charge. Ever since its inception, UPI has made financial transactions much easier for account holders.

Transferring money through UPI requires each user to have an ID, termed as the UPI ID. The UPI ID is a unique identification for a bank account that is used to send and receive funds from one bank to another. In UPI payment applications such as Paytm, you don’t need to enter the receiver’s UPI ID. You can simply select the receiver’s contact from your phone book or enter the receiver’s contact number to send money via UPI. The UPI PIN, on the other hand, is a 4 or 6-digit personal identification number required to transfer money through UPI. Every account holder has the option to set his/her UPI PIN as per convenience.

Features of UPI

Nowadays, you would hear every bank account holder talk about transferring funds through UPI. If you haven’t used UPI quite often, then here are the reasons behind the hype:

  • UPI payments are very fast and typically, payment can be completed within seconds
  • Almost every bank allows UPI transactions through mobile applications
  • Payments are completely safe. To complete a payment, the user needs to have the SIM card of his mobile number present in his phone and also needs to enter the secret MPIN each time
  • UPI Payment facility allows individuals to request money from some other individual, which is not an option with other payment methods like IMPS, NEFT
  • These mobile payment applications also offer the facility of bill payments, meaning that you can set up timely reminders for all your bill payments and make the payments using the application at just one click
  • In case of any trouble or suspicious activity on your account, you can easily file a complaint using the mobile payment application
  • Payments can be made 24*7
  • It’s completely free!

Why Should You Use UPI?

Unified Payment Interface or UPI has more benefits than you can imagine. Here’s a list of a few of them-

  • Simplified, hassle-free online payments
  • Safe and secure mode of money transfer
  • Allows you to make payments towards your bills, shop on e-commerce websites, etc.
  • Lets you make payments by scanning QR codes at your nearby departmental stores, chemist shops, etc.
  • Regularly paying through UPI also helps you earn discount vouchers, cash back, and other rewards

Registration Process in UPI enabled application

UPI allows an individual to transfer money directly from his/her bank account to the recipient’s bank account in a few seconds. The facilitation of UPI has completely eliminated all this hassle. Once the sender has completed his/her UPI registration process, he/she can transfer the money with only a few clicks on a UPI payment application like Paytm.

Steps to Register in UPI

To complete your UPI registration process, follow these steps-

  1. Download the Paytm UPI mobile payment application
  2. Just enter your mobile number. If you have a dual SIM phone, you may be prompted to select the SIM slot in which your mobile number is present
  3. An SMS will be sent from your number to verify your mobile number
  4. Once this is done, you will have to select your bank name from the list that will be presented to you. Please make sure that the mobile number registered with your bank is the same as the one you entered earlier. Your bank account details will now be fetched from the bank using your mobile number
  5. If you are linking your bank for the first time, you will be asked to set up a UPI PIN. You will need your debit card details for setting this up
  6. Your bank account is now linked via UPI and you are ready to make your first payment

Generating UPI PIN

To generate your UPI PIN, you must first install a mobile payment application, such as Paytm on your mobile phone. After installing the application, you need to create your own UPI profile/account and follow the following steps to generate your UPI PIN-

  1. Open a UPI payment application, such as Paytm, on your mobile phone
  2. Tap on the ‘Profile‘ icon in the top left corner of the Paytm mobile application
  3. In the left sidebar that opens, scroll down to the ‘Payment Settings’ option and click on it
  4. Next, click on the ‘UPI & Linked Bank Accounts’ option and you will be able to see the list of your linked bank accounts
  5. If UPI PIN is not set for a bank account, you will see a ‘Set PIN’ option under the bank account
  6. Click on ‘Set PIN’
  7. Now, enter the last 6 digits of your card number, along with its expiry date
  8. After doing so, you will receive an OTP on your registered mobile number
  9. Enter the OTP and the UPI PIN of your choice on the next screen that appears
  10. Click on ‘Submit’ and your UPI PIN will be set!

How to Generate M-PIN?

Follow these steps to generate M-PIN:

  1. Open the mobile payment application on your device and look for the “Create M-PIN” option
  2. Enter your debit card details such as your card’s expiry date, and the last 6 digits of your debit card
  3. Enter the OTP sent to your registered mobile number
  4. Now, enter the M-PIN of your choice and click on ‘Submit’

What is Unified Payments Interface (UPI) Transaction?

A UPI transaction is basically a way to transfer money from one bank account to another. Paytm UPI mobile application allows you to transfer money in multiple ways. Whether it is a mobile number, QR code, UPI ID, or account number- each of these methods is equally easy to use.

Transferring money through UPI requires each user to have an ID, termed as the UPI ID. The UPI ID is a unique identification for a bank account that is used to send and receive funds from one bank to another. In UPI payment applications such as Paytm, you don’t need to enter the receiver’s UPI ID. You can simply select the receiver’s contact from your phone book or enter the receiver’s contact number to send money via UPI. The UPI PIN, on the other hand, is a 4 or 6-digit personal identification number required to transfer money through UPI. Every account holder has the option to set his/her UPI PIN as per convenience.

How to get started with using UPI using the Paytm App?

  1. Download the Paytm, the best UPI app in India
  2. Just enter your mobile number. If you have a dual SIM phone the app will prompt you to select the SIM slot in which your mobile number is present
  3. Paytm will send an SMS on your number from the to verify the same
  4. Once this is done, you will have to select your bank name from the list that is visible on the screen. Please make sure that the mobile number registered with your bank is the same as the one you entered earlier. Paytm app will now fetch your bank account details using your mobile number
  5. If you are linking your bank for the first time, you will have to set up a UPI PIN by entering your debit card details for setting this up
  6. You have now successfully linked your bank account via UPI and you are ready to make your first payment!

Check UPI Transaction Status on Paytm App

To check UPI transaction status on Paytm app, follow these steps-

  1. Login to the Paytm application on your mobile device
  2. On the home screen, under the section, ‘My Paytm’, click on ‘Balance & History’
  3. The next screen that appears will show all the bank accounts linked with your Paytm app
  4. Scroll down further on this screen to find your entire transaction history
  5. You can click on any particular transaction to check its status and other details such as the transaction time, amount, transaction ID, etc.
  6. If required, you can also share the details of any particular transaction by clicking on the ‘Share’ option on the top right corner of this screen
  7. You can keep scrolling down on the screen to look at the previous transactions

Ways to Transfer Money Through UPI

You can transfer money using the mobile applications through the following ways-

  1. Mobile number – This allows you to transfer money from your bank account mapped with your mobile number
  2. QR code – Enables you to send money using the QR code enclosed with your VPA, Account number, IFSC, or mobile number
  3. VPA (Virtual Payment Address) – Allows you to send or request money from a bank account using your UPI ID
  4. Account Number – This lets you send money directly to the bank account

How to Make a UPI Transaction?

You can make a UPI transaction using either of the following methods-

  1. Selecting a Contact/Entering Mobile number – Sending money is as simple as sending a message. Just select a phonebook contact or enter a mobile number, specify the amount to be transferred and enter your PIN. That’s it! Your payment will be completed in a few seconds.
  2. Scanning a UPI QR code – You can also send money through UPI by scanning the receiver’s QR code. All you need to do is open the mobile payment application like Paytm on your phone, click on ‘Pay’, and select ‘QR code’. Scan the QR code of the receiver and enter the amount to be paid. Now enter your PIN and your payment will be completed in a few seconds.
  3. Entering UPI ID – To send money through UPI ID, all you need to do so is open the mobile payment application, and enter the receiver’s UPI ID. After this, you need to enter the amount that needs to be transferred and verify the transaction by entering your MPIN. Your transaction will be completed in a few seconds.
  4. Entering Account Number & IFSC – This the traditional way of payments and it is also supported on UPI. You may enter the account number & IFSC of the person you want to send money to, specify the amount and enter your PIN. Your payment will be completed in a few seconds.

Transfer money through UPI using Paytm today!

Is KYC Required For UPI Money Transfer?

The simple answer here is – NO. KYC is not required for making UPI money transfers on Paytm. Any user can make UPI-based transactions on the Paytm app without any concerns on the safety and security of user data. All the users registered on Paytm have to link a bank account with the Paytm app in order to perform UPI money transfers. Users become automatically verified when they link their bank account with the Paytm app since banks have already performed the KYC-check for all their users.

UPI Transaction Limit

To ensure the safety and security of transactions, all the UPI payment applications like Paytm are regulated by the guidelines of RBI. Owing to the current rules and regulations, the present UPI transaction limit per day on the Paytm app is Rs. 1 lakh per account, every 24 hours. However, it is important to note that the actual UPI transaction limit varies from bank to bank, which may also restrict the amount that can be sent at a lower amount too.

UPI Transactions Fees and Charges

Paytm mobile payments application that supports UPI services and it does not charge any charges for carrying out any UPI transaction. While there is a UPI transaction limit per day of Rs. 1 lakh on the Paytm application, there are no UPI transaction charges on the Paytm application.

How Does UPI Work?

To make a UPI transaction, you need a VPA (virtual payment address) just like you need a credit/debit card to make payment card payments. VPA stands for Virtual Payment Address which is basically the address to or through which you can make UPI money transfers.

A VPA is a unique financial address using which you can send and/or receive money in your bank account through UPI. As and when you create your UPI account on the Paytm app, your VPA gets created automatically. Now, to make a UPI transaction, you need to log in to your Paytm UPI payment application and click on the ‘UPI/Send Money To Anyone’ option. Select the receiver from your phone contact list, enter the mobile number of the receiver if it is not saved on your phone or scan the QR code of the receiver. Next, select the bank account from which you want to make the transfer and click on ‘Proceed’. Enter UPI PIN associated with the selected bank account and the amount will be immediately transferred from your bank account to the receiver’s bank account!

Participants in UPI

The following parties are involved in making a UPI transaction-

  1. Remitter bank
  2. Beneficiary bank
  3. NPCI
  4. Merchants
  5. Bank account holder
  6. Payer PSP
  7. Payee PSP

What is UPI 2.0?

UPI 2.0 is basically and newer version of UPI which has improved features and added benefits. The upcoming UPI 2.0 is said to be a more secure and comprehensive payment method with easier and simpler authentication process.

Features of Upcoming UPI 2.0

Following are the salient features of upcoming UPI 2.0-

  1. The UPI 2.0 facility allows the payment of utility bills such as rent, electricity, etc. using the UPI system
  2. UPI 2.0 comes with a pre-authorized transaction feature, using which users will be able to authorize their regular transactions such as payment of mobile bills before their due date
  3. The UPI 2.0 system will have the biometric authentication feature which has the fingerprint mapping technology and iris scanner. This will ensure increased security of UPI transactions
  4. UPI 2.0 will keep a check on the speed of transactions to make sure that fraudulent transactions are detected and prevented from being successful
  5. UPI 2.0 will allow transactions even if your mobile number is linked to other bank account, which the current UPI system does not allow
  6. The UPI 2.0 payment system will also enable payments using the Aadhaar number to facilitate transactions directly from the bank accounts of individuals

UPI History

Transferring money from one bank to another was a big deal before NPCI (National Payments Corporation of India) facilitated the option of inter-bank transactions using mobile applications. This RBI regulated interface, termed as UPI or Unified Payment Interface allows users to transfer funds instantly using a mobile device.

The facilitation of UPI or Unified Payment Interface has eased the financial lives of more people than one could ever imagine. The hassle of remembering the account numbers, IFS codes, mobile numbers, and bank branches is long gone. With UPI transfers, all you need to do is have the Paytm UPI payment application, save the receiver’s contact number in your phone and you are good to transfer funds from your bank account to the receiver’s. Paytm has made it further easy to perform UPI transactions at the comfort of your home.

UPI Market share

With increasing knowledge about UPI transactions and their benefits, the UPI market share is continuously on the rise. From a total of 93,000 transactions in the month of August 2016, the number of UPI transactions increased to 800 million in March of 2019.

Later on, in July of 2021, the number of UPI transactions were recorded at 43.25 crore, which were worth Rs. 56,735 crore with highest average daily transaction of 10 crore (100 million), which was twice the number recorded in July 2020. In December 2021, the total UPI transaction value reached Rs. 8.27 lakh crore, witnessing a 99% annual growth rate.

UPI also recorded 1.94 million IPO mandates in June 2021, which further increased to 7.66 million in the next month. Moreover, UPI owns the largest share in $2 trillion of annual digital payment in India.

UPI-related News as on 11 May 2022

  • As of April 2022, UPI hit a record high with witnessing 5.58 billion transactions worth of Rs. 9.89 trillion.

UPI-related News as on 9 May 2022

  • Apple Inc. has decided to no longer accept payments via debit or credit cards for the purchase of apps/subscriptions in India. Indian Apple users will only be allowed to make payments using Netbanking, UPI or their Apple ID balance.

FAQs
What is UPI full form?
UPI stands for Unified Payment Interface. It is a payment interface that allows the transfer of money from one bank to another.
What is the best rewarding UPI app in India?
Paytm is the best rewarding UPI app in India, owing to its innumerable benefits.
Are there any charges for UPI?
No, there are no charges for UPI payments on the Paytm app.
What is Paytm UPI limit?
Owing to the current rules and regulations, the present UPI transaction limit per day on the Paytm app is Rs. 1 lakh per account, every 24 hours.
Is UPI safe?
Yes, UPI is absolutely safe and secure as it is based on 2-factor authentication. UPI is regulated by the Reserve Bank of India which ensures that all the transactions are performed between registered banks and no frauds take place. Additionally, each transaction through UPI is secured with MPIN which is confidential to the sender.
What is UPI ID?
UPI ID is basically the virtual payment address of the bank account holder. It is used by the sender to transfer money to another individual through UPI. A UPI ID is unique to every individual and is allotted by the bank.
What is UPI PIN?
UPI PIN is basically the password required to authenticate a transaction. The UPI PIN must be kept confidential with the account holder.
Is UPI ID the same as UPI PIN?
No, UPI ID and UPI PIN are not the same. The UPI ID is a virtual payment address that must be shared with the payees to allow them to transfer funds to your account. The UPI PIN, on the other hand, is the password that you need to enter to confirm payment from your account.
How to transfer money using UPI?
To transfer money using UPI, you first need to set up your UPI account completely. Once that is done, you can go to the application, click on ‘Pay’ or ‘Send’, enter the receiver’s UPI ID or scan the QR Code, enter the amount to be transferred and click on ‘Confirm’. The money will be transferred in a matter of seconds.
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