Unified Payments Interface

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Anuj Goenka, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur


The Reserve Bank of India RBI along with National Payment Corporation of India NPCI launched Unified Payments Interface UPI this week. UPI essentially turns your smartphone into a bank.

It simplifies the process of money transfer with just a single click 2-step verification that any individual with a bank account and a smart phone will be the beneficiary of this new system.

The business process flow will be:

Eligibility: Holder of a bank account and a smart phone

1. Download the UPI app of a bank from Play Store

2. Link the bank account

3. Create a Unique ID/virtual address

4. Generate a mobile pin M-PIN… and you are done

How is it different from the existing system?

1. Simplified Process

IFSC code, bank account details etc. are required in the current system. However, with UPI, virtual address along with M-PIN is sufficient to transfer any amount of money ranging from Rs.1 to Rs.100,000.

E.g. Payment to newspaper vendor:

You share your virtual address with your vendor. Once details (virtual address and amount) are feed by vendor into the UPI app, the bank system will send a request for payment. You acknowledge the request, enter your M-PIN and transaction is complete with requisite amount being debited from your account.

Alternatively, you open your UPI app, enter the virtual address of vendor, input the required amount and validate the transaction through M-PIN.

2. Interoperability of various mobile wallets:

In the present system, one cannot transfer money among different wallets like freecharge, Paytm etc. UPI being promoted by RBI, will have tie-ups with all the banks and hence won’t face this issue.

 

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