What is UPI? How does it work?

UPI and so many cashback offer right? Well if you have never used UPI, you must have heard of it or have seen it on some sort of e-commerce website or fin-tech brands and wallets.

 

So, what exactly is UPI, Why are there so many offers around it, and most importantly, why is everyone seems to be using UPI? Today in this article we will look into almost every aspect of UPI and how it has impacted our daily life, what are its benefits, and more importantly how UPI became so popular. So, without wasting any time let's start.

 

What is UPI?

 

UPI, A unified payments interface, developed by NPCI – National Payments Corporation of India. It is a payment method that allows Indian customers to send money from one account to another with the ease of a click.

 

How to create a UPI?

 

Well to create a UPI, you will need a bank account, and a mobile number linked with the same bank account.

 

You can download any wallet application like Paytm, Phonepe, or Google pay and start using the UPI, Or you can start with NPCIs UPI application BHIM.

 

Next, you need to have the mobile number which is linked to the bank account, inserted into the device.

 

Then, In the application enter your Phone Number, Enter OTP as asked, And then Select your bank Name.

 

Wait for a few seconds. Now make sure that your device has a message sending pack as a message from your device will be sent to verify the number. After a few seconds, you will be prompted to Enter your Card Details, Enter your card details.

 

Now, a new prompt will be opened which will ask you to set your PIN, A pin is a password that will be asked to you every time you send payment/make a transfer. So, kindly do not share that with anyone.

 

And, now you are all set to use UPI. You can send/receive money on your UPI id which is linked to your bank account.

 

So the money you receive/send will be deposited/deducted from your respective bank account.

 

How Does UPI Work?

 

So UPI is a connection of banks. Where earlier banks used to operate on their own and separate bank has their procedure to deposit and withdraw money, UPI provided a set of rules for the bank to follow to become a part of the System.

 

Let us understand this with an example If you were to send your friend whose account is in PNB, 1000Rs from your SBI account. Then you would have to visit the bank first, or if doing Internet banking would have to probably wait 6 hours after adding the beneficiary. While, If you were to send it by visiting a bank, it could take up to 7 days at most.

 

But with UPI, Every bank registered itself in the UPI system, by following its norms. Later, every bank provided UPIs. That is @ybl, @oksbi, etc. For every user that registers on their UPI portal.

 

But having NPCI as a regulating authority of UPI, The systems would regulate traffic based on the UPI from which is coming. Like in your case, Your bank i.e SBI would get connected with PNB, and after verification from both ends, money would be exchanged. So, here is your UPI with @pnb, @oksbi made it possible to connect within seconds. Likewise, there are different banks associated and different customers involved.

 

As there are many platforms available in the market right now for creating UPI, you can create as many UPI as you want. And these UPI ids are known as VPA (Virtual Payment Address).

 

You can create/edit your UPI ids to any name you want. Moreover, you can also associate your email as a VPA.

 

UPI advancement –

 

As this technology spread like a fire in the whole of India, other nations have also become interested in it. United Arab Emirates NeoPay has agreed with UPI to allow UPI payments in UAE. Moreover, Indians can use UPI in Bhutan and Singapore.

 

Another news circulation states that France will be allowing Rupay Cards as well as UPI payments. NPCI and Lyra Network of France have signed MoU, which will eventually allow Indians to pay using UPI and Rupay Cards.

 

Conclusion –

Although UPI might be a secure and reliable platform, for now, you still have to maintain security from your side. Nowadays most frauds are being conducted on UPI, by saying you have received 1000Rs, etc. Just click and Enter Password to Receive. While this is fake news that you won’t probably look into, you should always keep in mind that never to share your UPI PIN, And neither you should enter your PIN while receiving the money.