UPI (Unified Payment Interface) – How to Use it?

Everything you need to know to use

UPI – Unified Payment Interface

Go Cashless with UPIUnified Payments Interface (UPI) is an innovative application launched by the RBI and developed by National Payments Corporation of India (NPCI) to make India a cashless economy. UPI app is available for download on Google Play Store. As compared to traditional methods of money transfer like NEFT or RTGS, UPI is a much sophisticated fund transfer mechanism. It does not need complicated steps for transferring money from one bank account to another. Unlike NEFT/RTGS, fund transfer activity does not get restricted to specific timing or specific days of the week. Being developed on the Immediate Payment Service (IMPS) platform, you get full autonomy to transfer fund on a 24*7 basis.

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Additionally, the fund transfer can be initiated by either the payer or payee. In payee initiated transaction, you can send money to a beneficiary’s account. For this, you need not enter sensitive information like bank account number, password or IFSC code, etc. You would just need the virtual id of the beneficiary. It means that fund transfer would become as simple as sending an SMS. You can set reminders on your smartphone to schedule fund transfer as per your particular requirements. In payer initiated transactions, like if you are cash strapped, then you can also send a request to your loved ones for getting funds transferred into your account.

Apart from simple fund transfer, UPI comes with value-added features that help you make utility bills payment, movie tickets & online railway reservation, insurance premium payment, online shopping, etc. UPI is a smart way to conduct low-ticket transactions which occur on a frequent basis. It is a prudent method which enables seamless peer-to-peer and peer-to-merchant transactions. UPI uses two-factor authentication to provide both safety and speed in fund transfer.

At present, you can benefit from this facility on your Android smartphones. For those of you who have an Apple operating system would have to wait for another six months as UPI versions for you are still in the developing stage. The 19 banks which have joined the UPI revolution recently are Andhra Bank, Axis Bank, Bank of Maharashtra, Bharatiya Mahila Bank, Canara Bank, Catholic Syrian Bank, DCB Bank, Federal Bank, ICICI Bank, Oriental Bank of Commerce, Karnataka Bank, UCO Bank, Union Bank of India, United Bank of India, Punjab National Bank, South Indian Bank, Vijaya Bank, Yes Bank and TJSB Sahakari Bank Ltd. Other banks are in the process of developing the app and making it accessible on the Play Store. If you are customers of IDBI Bank and RBL Bank Ltd., then you may link your account to any UPI enabled app of any other bank to carry out fund transfer.

Before using the services of UPI, you need to create a Virtual Payment Address (VPA) using the following steps:

Create VPA in Unified Payment Interface (UPI)

1. Download UPI app from Google Play Store on your Android smartphone.
2. Click on “Manage” tab in the UPI app.
3. Create a new VPA or link your existing VPA.
4. Link your bank account that you would use to send or receive funds.
5. You can also create multiple VPA for multiple bank accounts.

Your VPA would be in the format of mobilenumber@bankname.com. Suppose your mobile number is 3456723456 and you have a bank account at PNB. Then your VPA would look like 3456723456@PNB.

Send money using UPI by following the steps below:

Send money in Unified Payment Interface (UPI)

1. Login to your UPI account.
2. Click on “Send money” tab.
3. Enter beneficiary’s VPA, amount and remarks. Click Submit.
4. Carefully check the filled-in details on the screen. Click Confirm.
5. You will get a debit message on your mobile phone which means the transaction is complete.

Receive money using UPI by following the steps below:

Collect Money in Unified Payment Interface (UPI)

1. Login to your UPI account.
2. Click on “Collect money” tab.
3. Enter VPA of the individual (payer) from whom you would like to receive money, amount and remarks. Enter your VPA of the account that needs to be credited. You may choose to receive the money “immediately” or within the “next 7 days”. Click Submit.
4. Carefully check the filled-in details on the screen. Click Confirm.
5. When the payer “Responds to Pay” after checking your identity, the money gets credited to your account.
6. You will get a credit message on your mobile phone which means the transaction is complete.

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Cost of using UPI app

On every fund transfer or online payment transaction that you conduct, 75 paise would be deducted as fee wherein 25 paise would go to NPCI, and 50 paise would go to the Payment Service Provider (PSP). PSP refers to the payment bank which issues VPA to the user under UPI framework.

Also read: Income Declaration Scheme 2016: Revised deadline to pay taxes on your black money

Terms & conditions of UPI

1. UPI facility is available only for Saving/Current/ Overdraft bank accounts that are held in individual capacity. This facility is not available for accounts held jointly.
2. Your account should be KYC compliant.
3. You need to register your mobile phone handset and your mobile number at the PSP branch.
4. You can transfer a maximum of Rs 1 lakh on a day with the help of one VPA. However, there’s no upper limit on receiving money.
5. Entering wrong MPIN thrice would block your UPI transactions for one day. If same blockage is committed thrice, it will deactivate your UPI account requiring you to re-register for the same.
6. Currently, this facility is made available for transferring funds anywhere in India only.
7. If you don’t use your VPA for more than 180 days on a continued basis, then your registration will be suspended by the PSP.
8. You cannot use any other mobile number to avail UPI facility which is not registered at your PSP branch.
9. If you want to use UPI facility on any handset other than one which is registered at the branch, then you need to notify this at your branch.

Also read: All you need to know about FATCA & CRS Compliance

Final Words

In 2016, there were more than 200 million smartphone users in India, and it will keep on adding in the years to come. Moreover, compared to global average, India constitutes higher online shoppers and twice the number of individuals who use their mobile phones to make online payments. In this scenario, UPI app stands to gain as an ideal way for fund transfer. However, it needs to be emphasised that spreading awareness, educating customers and enhancing adoption would form the pillars behind the success of UPI in the economy.

About the author

KishorKumar Balpalli, believes that financial literacy and discipline is the key to one’s financial freedom. KishorKumar is a Certified Financial Planner, Personal Finance Blogger & the Founder of myMoneySage.in an award-winning Wealth Management platform. myMoneySage simplifies investing for individuals and amplifies business growth for Registered Investment Advisers by leveraging Artificial intelligence and machine learning. The AI of the machine plus the intellect of the human advisor enables comprehensive & client-centric advice at a fraction of the cost of a conventional adviser.

myMoneySage.in is an award winning personal finance platform. It helps you aggregate all your personal finance accounts like FD, Equity, Mutual Funds, PPF EPF, NPS including, Credit Cards & Loans etc. It's one place where you can track, plan and invest seamlessly. myMoneySage.in empowers you to invest in zero commission direct plans of mutual funds thereby helping you generate higher on investments. The best part is it comes with a lifetime Free plan.

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  • sonal deo says:

    It has help me in finding out more detail about unified payment interface.thanks for sharing such a lovely information.

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