UPI or Unified Payments Interface is an easy and e-payment method, which was developed by National Payments Corporation of India. This payment method facilitates inter-bank transactions. Reserve Bank of India regulates its payment interface. Through mobile platforms or payment applications, people can easily and instantly transfer their money to another bank.
Introduce of UPI
UPI payment method has introduced in the Indian market on 11th April 2016. National Payments Corporation of India (NPCI) established this payment method under the direction of Reserve Bank of India (RBI). The main motive of this payment interface is to create a smooth link between different banks and to connect the digital wallets.
Purpose of UPI
Before introducing UPI payment in Indian market, the people of India were facing many problems during banking transactions. People were going to the bank to do a transaction to another bank account. India had decided to create a cashless market between service providers and service seekers.
How does UPI work?
As per the name of itself, UPI works as an integrated working system. Its function replaces the use of cash and ATM card transactions. Account holders can send and receive money across any bank from their smart-phones. First, one user has to register the UPI payment system on the smart-phone by using Aadhaar identity number and 10-digit mobile number without bank account details.
Problems faced by users before introducing UPI
At the earliest, people were totally depending on cash-in-hand payments. Money transaction from one account to another account was a so long procedure. Bank account number, IFSC code, and many other details were needed to send or receive money. Net banking was also there before introducing UPI but, the payee needs to add a beneficiary name which may take up to 12 or 24 hours. People were totally depended on ATM transactions to withdraw money.
Advantages of UPI payment method
- UPI facilitates easy and secure platform for money transfers between different bank accounts.
- It promotes cashless transaction in market.
- From anywhere and at anytime one can do transaction within a short period of time.
- It only requires an UPI id to do money transfer instead of bank account number, IFSC code and other details.
- It doesn’t take time to add a beneficiary name by a payee.
- It only needs authentication to complete a transaction successfully.
- It doesn’t charge much amount of money to complete a transaction as compare to an other mode of transaction.
- One can easily link his or her all bank accounts to this single UPI id.
UPI in Indian markets
UPI has been the most preferred mode of payment with many milestone achievements. In FY-2020, NPCI has recorded 12.51 billion total numbers of transactions worth Rs. 21.3 trillion. UPI has slashed all the targets of online payment mode with a positive influence on Digital India. Due to increase in numbers of users, people are adopting this payment mode in Indian market and importance of UPI is getting more.
Limitations to UPI
UPI payment mode completely depends on a smart-phone and internet as basic needs. The transaction limit per day for UPI is Rs. 1 Lakh. Now-a-days, online frauds are increasing. So, it becomes hard to convince the bank account holders to install the bank application to get the UPI service.
- Sometime UPI users are getting into trap due to their negligence and unaware about the use of UPI payment method.
- Fraudsters always try to convince the victims to share their authenticated UPI pin and other details. After getting the details, fraudsters can get authentic transaction easily.
- Sometime hackers create a clone UPI payment interface to manipulate victims by sending link messages rapidly. When the victim clicks on the link sent by the hacker, then the hacker can get the input credentials of the victim’s account. By this the hacker can overtake the victim’s account.
Future of UPI payment
According to a previous 4 years report, it has been marked that the priority of UPI payment method is increasing as the number of smart-phone users and internet user increases. Most of the banks and e-wallets like Google-Pay, PhonePe, Paytm etc. are compatible with UPI payment mode. The NPCI has predicted that UPI will occupy 50% of the digital transactions by the year 2023. In future, UPI can replace the lengthier payment modes like NEFT, IMPS and RTGS and it will become the most preferred payment mode in the Indian market.
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