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.
You would have clearly heard the term “UPI” multiple times before, but do you know exactly what is UPI?
Let’s find out!
UPI or United Payments Interface is a rather new payment method which has proven to make the lives of many users much easier. 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. The UPI PIN is a 4 or 6-digit personal identification number required to transfer money through UPI. Every account holder has the option to choose his/her UPI PIN.
Why is everyone using 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!
How Mobile Banking came into existence?
Started by way of SMS in the year 2002, mobile banking (then known as SMS banking) was the first move towards eliminating the exchange of cash and making financial transactions digital. Mobile banking proved useful for users for making inquiries about their account balance, making online money transfers, etc. By the year 2010, when smartphones evolved as a major technology among the users, mobile banking moved a step ahead and became all the more common and useful. With Android and iOS operating systems, users could easily download the mobile banking applications on their devices and perform financial transactions online.
However, mobile banking still had certain limitations as listed below-
- Transfer of funds could be performed only on a few high-end mobile devices
- Regular use of mobile banking applications involved certain additional charges by the banks for providing their services
- Users of mobile banking are at a higher risk of falling prey to frauds and scams
- Loss of the mobile banking device directly provides access of all the mobile banking details to the criminals/thieves
- There were certain limitations on the amount that can be transferred through mobile banking and the time at which transactions could be made
How is UPI the new Mobile Banking?
With further advancements in technology and increasing demand for services like mobile banking, there was the need to evolve and counter the limitations of mobile banking. Just like mobile banking emerged as a better version of SMS banking in 2010, so did UPI emerge as a better alternative to mobile banking in 2016.
The NPCI recorded annual transactions worth Rs. 75.6 lakh crore through UPI between February 2021 and January 2022. In terms of amount, transactions worth Rs. 4,106 crore were made through UPI between the mentioned 12-month time period. These numbers and the continuously growing UPI user base speaks for itself. And why wouldn’t it?
Considering the benefits and ease of user experience that UPI services offer, it is indeed one of the easiest and fastest ways of money transfer for users across the globe. Along with this, Paytm mobile payment application has made it further easier to transfer money, from the comfort of their homes. All that a user requires is to have the Paytm app and it will hardly take a minute’s time to send money from one user to another. What else does one need?
Benefits of UPI
Let’s throw some light on the some of the several benefits of UPI-
- UPI offers simplified, hassle-free online payments
- It is quite safe and secure mode of money transfer
- UPI allows users to make payments towards their bills, shop on e-commerce websites, etc.
- Users can make payments by scanning QR codes at their nearby departmental stores, chemist shops, etc. using UPI
- Regularly paying through UPI also helps users earn discount vouchers, cash back, and other rewards
How to get started with using UPI?
- Download the Paytm mobile payment application
- 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
- An SMS will be sent from your number to verify your mobile number
- 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
- 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
- Your bank account is now linked via UPI and you are ready to make your first payment!
How to Transfer Money Using UPI on Paytm?
Sending money through UPI on the Paytm application is easy and safe. You may send money through UPI using either of the following ways-
- 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.
- 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.
- 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.
- 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.
Taking a glimpse into the financial history shows how mobile banking emerged from SMS banking and a few years later, UPI emerged from mobile banking- both these methods being the better versions of the previous one. While mobile banking intended to eliminate the limitations of SMS banking, UPI tends to eliminate the limitations of mobile banking. Hence, it can be rightly said that UPI is indeed the new mobile banking!