April 26, 2023

What is UPI ID - Meaning, Full Form and Transaction Limit

What Is UPI?

The UPI full form is Unified Payment Interface. It is a system that integrates various bank accounts, efficient fund routing, and merchant payments into a single mobile application of any bank that takes part in the integration. Additionally, it supports "Peer to Peer" collect requests, which can be planned and paid for according to the need and convenience of the user. One can do all this without providing the IFSC code or account numbers. The Rupay payment feature of the UPI acts as a platform for multiple banks to interconnect and transfer funds seamlessly.

How Is UPI Unique

Enables Real-Time Money Transfer

The most distinguishing feature of UPI payments is that it enables the real-time transfer of funds around the clock. Users can use UPI apps anytime to cater to their payment needs, unlike NEFT or bank deposits and withdrawals.

No Hassle Money Transfer

A smartphone with a UPI app, a stable internet connection, and a bank account are all needed to send and receive funds. Users can send money across different accounts using this interface and access their own multiple accounts through a single app on their smartphones.

Two Factor Authentication

UPI offers two-factor authentication (2FA), which adds an extra layer of protection by incorporating biometrics, security tokens, and one-time passwords, as opposed to single-factor authentication, which requires users to submit only one element, generally a password or PIN.

VPA Support

A UPI app's Virtual Payment Address (VPA) is a special ID you need to complete payments. This VPA serves as additional protection because it does not require you to provide additional personal or bank information. The user's bank information will only need to be entered occasionally, except at the time of linking the user's bank account to the UPI app.

Good Substitute For Cash

It is a very helpful substitute for the inconveniences of Cash on Delivery or rushing to an ATM to get cash to make payments. Moreover, users can pay the exact amount, which alleviates the problem of getting and giving change.

Keep track of Splitting Bills With Friends

It's not just a solution for hassle-free payment but also has a feature to add expenses, split your bills among your friends, and share it with them within the app itself.

UPI Participants

Merchant
Payer PSP
Payee PSP
Beneficiary Bank
Remitter Bank
NPCI
Bank Account Holders

How Does UPI work?

UPI primarily functions on a smartphone and a bank account with a UPI-member bank. With these two essentials in hand, you need to create your UPI ID and PIN to start transferring and receiving. You should register your smartphone's SIM linked with your bank account.

UPI identifies the bank account you have linked to the UPI account, which will send or withdraw money for transactions. A 4-digit PIN or Personal Identification Number is to be set by the user to authorize the money transaction that is to take place. The account holder may select this PIN. Here is a stepwise guide to set up your UPI.

Download any UPI payment app like GooglePay, PhonePe, BHIM, or Paytm from the App Store (iPhone users) or PlayStore (Android users).
Create a virtual ID that will serve as the unique ID to transfer and receive payments.
Set your UPI-PIN, which will be your phone's unlock pin by default.
Verify your bank details by entering and linking the OTP generated to the app.
You will now be able to set up your Virtual Payment Address.
Set your mPIN, which will be asked before processing each transaction.

Once your account is set up, you can now make payments to others either by entering the virtual payment address (VPA) of the receiver, account number and IFSC code, registered phone number, or QR code as per the availability and need.

Benefits You Receive From UPI

Turning to UPI transactions can have several benefits apart from contributing to the digitized Indian economy. Here are its benefits:

Benefits for Banks

It is a safe transaction platform.
Single Click/ Two-Factor Authentication
Payment Basis Single/Unique Identifier
Enables seamless merchant transactions
Universal Application for a single transaction

Benefits for Merchants

No lower limit for a transaction to happen
In-App Payments (IAPs)
Resolves the hassle of Cash on Delivery
Supports eCom and mCom transactions
No risk of storing the customer's Virtual Address

Benefits for Customers

Available on most bank transaction
No extra fee
Round-the-clock availability
Single click authentication
Easy to raise complaints

Registration in UPI supporting applications.

Follow the following steps to register:

Download the UPI application from either the bank website or App Store.
Create a profile by filling in your virtual id details.
Navigate to the 'add/link/manage bank account' option and link the bank account to your virtual id.

To generate your UPI PIN, select the bank account from which you want to initiate a transaction, and then follow the following steps to change the PIN to your preference:

The bank will send you an OTP to your registered mobile number.
Note the last six digits of your debit card number and its expiration date.
Click "Submit" after entering your preferred UPI PIN and the OTP.
Receive a confirmation notification.
Type both your old and new UPI PINs and click "Submit" again.
Another confirmation mail will be received.

Performance

PUSH

To send money using a virtual address:

Log into the UPI app
Select the 'Send Money/Payment' option after logging in
Type in the beneficiary's/Payee's virtual id, the account to be debited, and the amount
Press the 'confirm' option after reviewing the details that show on the confirmation screen
Receive a success or failure notification for the transaction

PULL

For making money requests:

Sign in to the UPI app
Choose the "Request Money/Payment" option
Enter the virtual ID of the beneficiary or Payee, the account to be credited, and the amount
A confirmation will appear on the screen.
Submit the UPI PIN
Another confirmation screen will appear
The payer will receive notification of the money request
The payer will have the option to accept or reject the request
The payer will input the UPI PIN and authorize the transaction if the payment is accepted.
If the payment is successful, the bank will send you an SMS or an alert.

Product

Financial Transactions

The following financial transactions are supported by UPI:

Pay request: It is a transaction in which the consumer initiating the request pushes money to the intended recipient. The payment address will have the mobile number and MMID, account number and IFSC, and virtual ID.

Collect Request: It is a transaction where the customer uses their virtual ID to withdraw money from the intended remitter.

Non-Financial Transactions

UPI supports the following non-financial transaction types:

Mobile Bank Registration
Generate a One-Time Password (OTP)
Set/Change PIN
Check the Status of a Transaction
Raise a Dispute or a Query

Apps Offering UPI in India

PhonePe
BHIM app
Paytm
MobiKwik
Uber
Google Tez
Chillr
SBI Pay
Paytm Payments Bank
iMobile
BOB UPI
Axis Pay

Conclusion

Given everything we know about UPIs, it is safe to state that consumers are urged to start the process of giving up cash. It has started to change our ways of making transactions and introduced a new digital era of finance management.