These days, you will find a lot of people talking about UPI payments and how it is going to be a trailblazer in the domain of digital payments. It is also expected to play a major part in India becoming cashless – a major aim behind the demonetization initiated by Narendra Modi. Obviously, mobile wallets are also going to play a role – and a good one at that – in this regard.
The definition of UPI
UPI stands for unified payments interface. It will allow you – the first generation of smartphone users – to perform net-banking transfers with ease. As the early reports state, it takes a little time to set this up and then an equal amount of time to transfer the money from one account to another. Here you do not need a bank account number, you do not need to log in and wait and there is definitely no need for an IFSC (Indian final system code) over here. You just need to know a username, which is also known as virtual private address or VPA, if you want to transfer money to someone in a matter of a few seconds.
The need for UPI
One of the major reasons as to why we needed UPI so much was the fact that net banking is not as efficient as we wish it to be and it also takes a hell of a lot of time more than we would ideally want it to. Net banking is essentially for internet banking, to make sure that it can be done safely. However, it also involves a lot more steps that can make the entire process a very problematic one. Even if you use IMPS (immediate payment system) it is still going to take quite a long time. With UPI you can basically transact with your mobile phone thus reducing a lot of friction per se.
The biggest benefit of UPI is that it is available every single day of the year – even on holidays – and stays on 24 hours across the day. This can help you in small purchases such as a bottle of cold drinks or a few packets of chips from your local grocery or supermarket. If you wanted to use net banking now you would need to take their bank details, add them as beneficiaries and then confirm, and then log on to your mobile banking or net banking app each and every time. Then you would have to wait for the one-time password (OTP) and then also share information such as grid numbers that are there at the back of your credit card.
Its difference from mobile wallets (Digital Wallets Vs. UPI)
Mobile wallets are basically apps where you keep your money. In these cases, you take money from your bank accounts and keep money by using bank cards or net banking. However, UPI is more like the immediate payment system in the sense that you just use it to transfer money from one account to another. In this case, there is no necessity for the third party wallets and other similar apps.
What effect will this have on mobile wallets?
With mobile wallets, you get some extra security and thanks to the various third party systems coming into play it is easier for you to use money in these wallets for payments such as utilities and cab fare. For example, money kept in PayTM can be used for paying various bills, recharging one’s phone, shopping at a marketplace and other online establishments, and paying for the cab rides. It is true that UPI and the whole ecosystem will need some time before it reaches the point. However, once it does it could have a detrimental effect on the said wallets.
It is wrong to assume that they would just go out of circulation. However, they will definitely need to find out ways in which they can become more attractive propositions compared to payments using UPI. As of now, they definitely represent a much better deal than UPI because of the ease with which they can be used and the amount of offers that they are making to spice things up. It is in fact expected that UPI would be added by these wallets as a mode of payment instead of a direct confrontation.
How can UPI be used right now?
As of now, you will be able to use UPI the same way and for the same purposes that you have been using net banking so far. However, the person or entity you are transferring the money to should have UPI installed as well. Otherwise, the transfer will not happen. It is expected that in the days ahead you will be able to do it on feature phones without UPI or VPA. It is also expected that this app will also serve the same function as the mobile wallets. How well it does in the future will also depend on how quickly the payments work.
Can be used right away?
In case, you already have a bank account with operational mobile banking and net banking facilities you should be able to use UPI. However, it is important that the mobile phone number –where you are installing your UPI – should be registered with your bank account. At least one of your bank accounts should have the said number.
How to get the app?
You can look up the Android app store on Google Play and see that there are already 25+ separate UPIs including BHIM, an app launched by Narendra Modi. You can search with the name of your bank and the word UPI. This way, you will be able to find the UPI of your bank – it is important that you download your bank’s official app. As of now, you will not get many versions of the same on the iPhones since the iOS versions of the same are yet to be developed by the banks. The TruPayIndia app can only be used to receive money as of now.
After downloading the said app you will need to verify your phone number by way of SMSs. Next, you share basic information such as name and e-mail and then set a four digit pin.
How to transact by using this app?
The first step, in this case, is to download the app. Then you need to launch it and register yourself. In this phase, you need to verify your phone number. UPI system normally has details of your bank account and then authenticates the same using the phone number you have provided. This is why you should install the app on your registered number only. Once your number has been verified you can provide some basic information such as e-mail and name.
After this, you need to set a four digit password or PIN. In case, you forget your PIN you can get it from your e-mail itself. Then you need to add a virtual password address (VPA), also called UPI username. You can have three VPAs but you will never be able to delete them. This is why you need to be very careful with these. This VPA is not case sensitive.
After this, you need to add your bank account to the same. You can do this from the bank accounts menu by using the add bank account button. Always choose the bank account linked to that phone number. If you have many accounts linked with the number you can add all of them. Your MPIN needs to be a unique one.
Now, that you are done with that part you need to go to app’s home and click on send. Then you need to go to VPAs and then add a VPA contact. The third step is to enter the amount that you wish to send. This way, you will be able to send money and receive the same by using UPI. In fact, receiving money on UPI is easier. In this case, the money will be deposited in the bank account/s linked to the account.
The upper limit for transacting using UPI is INR 1 lakh. In the case of a higher amount, you will need to use conventional banking or net banking.