About Unified Payments Interface (UPI)
- Unified Payments Interface (UPI) is a real-time digital payment system that enables instant fund transfers between bank accounts through a mobile application.
- It was developed by the National Payments Corporation of India (NPCI), an RBI-regulated entity, and is built on the Immediate Payment Service (IMPS) infrastructure.
- UPI was launched in 2016 to promote a secure, interoperable, and cashless payment ecosystem.
Key Features
- Enables 24×7×365 instant fund transfer.
- Supports Person-to-Person (P2P) and Person-to-Merchant (P2M) transactions.
- Allows linking of multiple bank accounts in a single UPI-enabled app.
- Uses a Virtual Payment Address (VPA) instead of sharing bank account details.
- Transactions are authenticated using a UPI PIN (4–6 digits) with two-factor authentication.
- Supports QR code-based, mobile number-based, and account-based payments.
UPI Ecosystem
- Regulator: Reserve Bank of India (RBI)
- Developer & Operator: National Payments Corporation of India (NPCI)
- Settlement Platform: IMPS
- Participants:
- Payer
- Payee
- Payer PSP (Payment Service Provider)
- Payee PSP
- Remitter Bank
- Beneficiary Bank
- Merchants
Important UPI Services
- UPI Lite: Enables small-value transactions without immediate core banking involvement.
- UPI AutoPay: Recurring payments for subscriptions, EMIs, and utility bills.
- UPI 123PAY: Digital payments for feature phone users without internet.
- Credit Card on UPI: Selected credit cards can be linked for merchant payments.
- Cross-border UPI: Accepted in several countries through international partnerships.
Conclusion
- UPI is India’s flagship real-time digital payment system that has revolutionized secure, interoperable, and instant retail payments while advancing financial inclusion and the Digital India initiative.
| This concept has been elaborately discussed in the following article: RBI Surplus & UPI User Charges: Can RBI Fund UPI Without Charging Users? |