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UPI - The ever expanding digital payment !

“UPI accept karte hai ?” "QR code dena bhaiya"

The new favorite lines of Indians, whether it is buying a pizza at Domino’s or having chai and maggi at a Tapri, Whether it is splitting the bill among friends or getting a recharge done for your siblings. UPI is now available at every corner of India. UPI was started as a digital India initiative and 6 years later here we are with UPI reporting 6.28 billion transactions amounting to Rs 10.62 trillion, according to data released by the National Payments Corporation of India (NPCI) in July 2022.

What is UPI ?

The Unified Payments Interface (UPI) is a system that integrates various bank accounts, seamless fund routing, and merchant payments into a single mobile application. A bank account is connected through UPI to several virtual payment addresses (VPAs). As a result, sending money is as simple as sending an SMS.

The pilot was introduced by Dr. Raghuram G. Rajan, Governor of the RBI, in Mumbai on April 11, 2016, with 21 participating banks.

One can send up to Rs 1 lakh to any bank account using a mobile phone without providing their card or net banking information or wallet password. Even without knowing the beneficiary's account number, UPI payments can be made! The recipient can provide a virtual address, such as the sender's name or phone number, rather than the beneficiary's account information.

How to set up your UPI account ?

  1. Verification of Mobile Number: To verify and register a mobile number on the specific app, an SMS must be sent from the User's phone.

  2. Choose your bank's name from the banks provided on the screen after verification.

  3. Users who are signing up for the first time will be required to provide their bank account information, such as the account number, IFSC code, etc., and create a 4-6 digit UPI PIN.

In just 3 simple steps, you are ready to make your first payment using UPI.

How does UPI work ?

The Unified Payments Interface is a set of standard APIs (a software middleman) that offers the pay (push) and collect services (pull). It makes these two operations possible by employing what is known as the Virtual Payment Address of each party to the transaction.

Each consumer who sends or receives a UPI payment communicates with three essential parties: their bank, the Payment Service Provider (PSP), and the UPI application on their phones.

The National Payment Corporation of India hosts and maintains the UPI APIs, which are used by the PSP and the Bank directly (NPCI).

UPI applications are the mobile apps that you are most familiar with, such as BHIM UPI, PhonePe, and Google Pay.

PSPs manage connectivity with the bank and NPCI as well as user authentication. They also serve as the UPI applications' back-end infrastructure (aka Third Party Application Provider or TPAP). Because only banks are currently permitted to directly connect with the NPCI-hosted UPI switch, only banks may currently fulfil the role of PSP. It is the responsibility of the banks that hold the customer's accounts to actually debit the payer and credit the beneficiary.

UPI to the world

In his speech during Digital India Week 2022, Indian Prime Minister, Narendra Modi highlighted the need of UPI expanding beyond Indian boundaries.

Nepal is the first country to have adopted the UPI payment system. This project will encourage more individuals to embrace digital payment methods, speed up cashless transactions in Nepal, and enable immediate P2P and P2M UPI payments.

Bhutan has already adopted UPI standards for its QR code, and the BHIM UPI mobile application has already been launched.

UPI is being connected by Singapore and India to PayNow in Singapore to allow for quick, low-cost cross-border financial transfers. It is expected to go live in the second half of 2022.

The National Payments Corporation of India (NPCI) and Mashreq, one of the biggest financial institutions in the UAE, have partnered to give UPI acceptance across the nation.

The NPCI has inked a MoU with Lyra Network in France to accept UPI and RuPay.

NIPL (NPCI International Payments Limited) has partnered with Liquid Group to accept QR-based UPI payments in 10 Asian markets, and it is also in talks with 30 countries to provide UPI.



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