Explained as Unified Payment Interface, UPI payment is a mobile payment method that allows you to transfer funds from one bank account to the other. Ever since its facilitation, UPI has made financial transactions much easier for account holders. There are innumerable benefits that explain why you should make use of UPI.
What is UPI Payment?
UPI Payment is the advanced version of the old-school payment methods of IMPS and NEFT. Through UPI Payment, the account holders can transfer a certain amount from one bank account to another without additional charges. To transact through UPI, every individual needs to set up a UPI ID that works as the virtual payment address for the account holder, and a UPI PIN that is the password for confirming the transaction.
NPCI, short for National Payments Corporation of India joined hands with RBI (Reserve Bank of India) and the IBA (Indian Banks Association) to build a payments infrastructure that allows banks to connect and facilitate the transfer of funds among individuals.
The UPI payment method has turned out to be useful for many because of the following reasons-
- To transfer money through UPI, the user does not need to enter any specific details of the receiver. Only the receiver’s UPI ID is required to transfer money from one bank account to the other
- Unlike other payment methods, UPI money transfers do not require much hassle and can be completed within a few minutes
- UPI facility allows individuals to request money from some other individual, which is not an option with any other payment method
- Almost every bank allows UPI transactions through mobile applications
- Foreign transactions are much easier and cheaper (only minimal charges need to be paid) with UPI
How does UPI Payment Work?
The traditional way of transferring funds online requires the sender to provide the receiver’s details such as the account number, IFSC, account type, Bank name, etc. Entering these details will add the receiver as a new payee to your account within 12 hours. You can make the transfer only after this process is completed.
UPI came into existence only to allow individuals to get away from this time-consuming and complex process. With this facility, individuals can easily transfer money to one another, using only the specific UPI ID as allotted by banks to the account holders. Before you begin to make payments through UPI, you need to register yourself on the application. Here’s how you can do that-
- Download a mobile payment application, like Paytm
- Create your profile by providing information like your name, mobile number and bank account details
- After entering your details, you will have to verify your account through an OTP sent to your registered mobile number
- Once this is done, you will have to select your bank from the drop-down list that appears and enter the last 6 digits of your card number along with its expiry date
- Post this, you will be asked to give a unique UPI ID from your bank (Your UPI ID is your virtual address using which, you can send/receive payments through UPI)
- Next, you will have to enter a specific MPIN of your choice (The MPIN acts like a password for all your transactions through UPI)
- After completing the above steps, you will receive a notification about your successful registration on the application
Once you have successfully registered yourself on the application, you need to follow some simple steps to make UPI payment /transfers.
Firstly, it is important to note that you can make money transfer through UPI using either of the following 3 ways-
- Using the 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 minutes.
- Using the 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. The money will be transferred in a few seconds.
- Using IFSC– To make UPI payment, you can also use IFSC. To do so, you need to log in to the mobile payment application, click on ‘Pay’, select the ‘IFSC’ option, enter the amount and click on ‘Confirm’. Your transaction will be successful immediately.