UPI is the dedicated platform that lets the users make fund transfers without the account number or the IFSC codes. UPI transfers could be made with the user's phone number and the virtual payment address that is called the - UPI ID.
Through the elimination of providing the bank account number and the IFSC Code, the UPI will secure the individual from major drawbacks of online transaction methods. That is the online theft or online misuse of important data.
It is secure, seamless, and an efficient method to perform monetary transactions with the utilization of the UPI PIN.
UPI is the instant and real-time payment system that will let an individual send money instantly from their own bank account to another's. UPI will work as an alternative to payments made through IMPS or NEFT.
It is a secure transfer of funds through the UPI ID or PIN, and it will act as the virtual payment address for the user while they set up the account.
UPI PIN stands for Unified Payments Interface Personal Identification Number is a four or 6-digit number that is set by the users themselves; it is either at the time of the UPI registration on a UPI application or later.
Since the UPI PIN will allow the confirmation of a transaction by the user, it should not be shared with any stranger in order to avoid fraud.
The UPI PIN is a password that needs to be provided by the user to make sure of a transaction, and here is why it is crucial to carry out the transactions through UPI:
Following are the applications that utilize a UPI PIN for the authentication of a fund transfer:
In order to use a payment mode, individuals need to sign up for the service at the bank. This could be done on the phone or internet banking of the specific bank. After that - here are the steps that need to be followed in order to generate the UPI PIN:
In order to change the UPI PIN, you would have to follow the below-mentioned steps:
Note: The UPI PIN is a password that holds control over the funds in the bank account. Therefore - the UI PIN needs to be kept highly confidential. You will also have to set a UPI PIN that is simple to remember so that it is not forgotten.
The below-mentioned instructions can be followed to send money using the UPI PIN:
Individuals can transfer funds in any of the following ways-
Note that the maximum limit for each UPI transaction per day is Rs. 1 lakh as per NPCI’s website. However, this limit may vary from one bank to another.
Now that you know what UPI is and how you can transact with it, let’s understand how it works.
To understand how UPI works, it is essential for individuals to know about the following entities that are involved in the transaction process-
NPCI operates settlement systems and enables digital payments in India. In the case of UPI payments, this entity links banks and Payment Service Providers (PSPs). It ensures that data flow between mobile-based payment applications and banks are sent to the right destination.
Payment Service Providers refer to mobile-based applications that enable users to initiate and complete UPI transactions. Examples of such mobile applications include PhonePe, BHIM, and Google Pay.
These applications enable users to create a UPI ID through which they can accept or make payments. Currently, as of October 2021, there are over 20 NPCI-certified mobile apps that can issue UPI handles. That said, all these PSPs require a sponsor bank before they are able to onboard users. For example, some of the sponsor banks of Google Pay are ICICI, HDFC, SBI and Axis.
In the case of UPI transactions, funds are transferred from the sender’s (issuing) bank to the receiver’s (merchant’s) bank account. Issuing banks have to debit money once the NPCI places a request. Moreover, they have to send a response to NPCI once the debit is successful.
As a part of the UPI transaction process, the acquiring/ receiver’s bank has to credit funds upon the NPCI’s request. Also, acquiring banks have to send a credit response to NPCI once the credit is successful.
Payee PSP refers to the payment gateway/acquirer that a merchant utilises for P2M transactions.
These are some of the entities that collectively work towards ensuring that the UPI system functions flawlessly.