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Unified Payments Interface ("UPI")
The launch of the Unified Payments Interface ("UPI") by National Payments Corporation of India ("NPCI"), has provided an impetus to India's move to incentivize digital payments with the vision to transform India into a digitally empowered economy and reduce dependence on cash transactions. NPCI is the umbrella body for all payment systems in India, which makes digital transactions as effortless as sending a text message.
UPI makes cutting-edge changes by supporting real time transfer of money between accounts across banks using smartphones by use of just one single interface besides creating interoperability and superior customer experience. Embracing the smartphone boom in India and the inclination of customers to move to digital mobile-based solutions, UPI addresses the challenges and limitations of the existing payment systems, wherein customers are required to disclose sensitive financial details like bank account details, IFSC code, credit/debit card details and sensitive PIN numbers while initiating transactions and juggle between different mobile banking applications with their different user IDs and passwords.
Unified Payments Interface (UPI) is an instant payment system developed by the National Payments Corporation of India (NPCI), an RBI regulated entity. UPI is built over the IMPS infrastructure and allows you to instantly transfer money between any two parties' bank accounts.
UPI-PIN
UPI-PIN (UPI Personal Identification Number) is a 4-6 digit pass code you create/set during first time registration with this App .You have to enter this UPI-PIN to authorize all bank transactions. If you have already set up an UPI-PIN with other UPI Apps you can use the same on BHIM. (Note: Banks issued MPIN is different from the UPI UPI-PIN, please generate a new UPI-PIN in the BHIM app) Note: Please do not share your UPI-PIN with anyone. BHIM does not store or read your UPI-PIN details and your bank's customer support will never ask for it.
Payment Address
Payment Address is an Address which uniquely identifies a person's bank a/c. For instance, the Payment Address for BHIM customers is in the format xyz@upi. You can just share your Payment Address with anyone to receive payments (no need for bank account number/ IFSC code, etc.). You can also send money to anyone by using their Payment Address. Note: Do not share your confidential UPI PIN with anyone.
Virtual Payment address eliminates the need to provide sensitive information like a bank account details, debit/credit card details and CVV numbers. Also, unlike a mobile wallet, a customer is not required to set aside funds upfront in the mobile wallet setup with the service provider and all transfers under the UPI are made from the bank account linked with your virtual payment address. A virtual payment address is an identifier that will be mapped to a customer’s bank account, enabling
the bank providing the UPI services to process transactions through the bank account linked with the respective virtual payment address.
Data Security
In terms of data security, UPI provides for a single click two-factor authorization, which implies that with one click, the transaction is authenticated at 2 levels, compliant with the existing regulatory guidelines issued by the Reserve Bank of India ("RBI"), without disclosing banking or personal information. As UPI primarily works based on an individual's 'virtual payment address', one can send and receive payments solely based on their 'virtual payment address' without providing any additional details. For example if you need to make a payment to a merchant for purchases made at a store, you will need to provide him only your 'virtual payment address', the merchant will then enter your 'virtual payment address' into his UPI app, the UPI app will send an authentication messages to the 'virtual payment address' linked to your mobile device, once your receive and acknowledge the message by entering your password will the transaction be completed and the amount payable to the merchant will be debited from your bank account.
Aggregator of all accounts
UPI acts as an aggregator of all accounts held by a customer enabling such customers to make transactions from multiple accounts owned by them, from one single mobile application or web interface and a customer is free to choose to use any bank's UPI application. Consequently, a customer can own multiple virtual payment addresses wherein each virtual payment address can be linked to a specific account and organise payments or collections, the way it suits them. Moreover, special instructions like setting an upper limit for payments on certain handles, and restriction of merchants or outlets at which a certain handle can be used, and standing payment instructions make the whole process very useful to customers.
The banks offering UPI services are required to be authorised by the RBI to provide mobile banking services. It is significant to note that even though the RBI has not issued any specific guidelines on the provision of UPI services, the transactions undertaken through use of UPI are required to be compliant with the guidelines issued by RBI including but not limited to, customer registration process and KYC guidelines.
How UPI / BHIM at POS works?
• This innovative dynamic QR-code based solution uses the store's existing credit/debit card POS terminal to enable UPI-based cashless payments.
• When a customer requests UPI Payment mode, the cashier simply needs to select the 'UPI Payment' option on his existing card POS terminal and inputs the relevant bill payment amount.
• This triggers the generation of a dynamic QR-code on the POS terminal screen itself which can be scanned into any mobile-based UPI-apps like BHIM used by the customer.
• When scanned, the QR code automatically transfers relevant transaction details and displays it on the customer's payment app for authorizing payment transfer.
• Once the payment transfer from customer's UPI-linked bank account to store's UPI-linked account is completed, the payment solution triggers a settlement confirmation to the initiating in-store POS terminal for printing out a transaction completion charge slip.
Benefits:
By enabling such a UPI payment confirmation on the merchant POS terminal itself, the new in-store UPI interface addresses a long standing implementation hurdle holding back faster spread of UPI-acceptance in large multi-lane retail stores.
With multiple checkout points, the cashiers in these stores have no direct means of payment receipt prior to releasing the purchased goods to the customer. This is unlike a small single cashier store where such a confirmation could be received via a simple text message to the single cashier's own mobile phone.
The new solution enables the crucial payment confirmation to be received on cashier-independent infrastructure like the store POS terminal - a necessity for multi-cashier stores with high cashier churn. Usage of a Dynamic QR with the merchant VPA (Virtual Private Address) or UPI ID and amount embedded in it eliminates the need for typing in of the customer or merchant credentials in the POS.
This process offers convenience besides eliminating the cumbersome and error-prone process of typing out credentials.
Key points about UPI
1. How is UPI different from IMPS?
• UPI is providing additional benefits to IMPS in the following ways:
• Provides for a P2P Pull functionality
• Simplifies Merchant Payments
• Single APP for money transfer
• Single click two factor authentication
2. Does a customer need to register before remitting funds using UPI?
Yes, a customer needs to register with his/her PSP before remitting funds using UPI and link his accounts
3. Does the customer need to register a beneficiary before transferring funds through UPI? What details of beneficiary will be required?
No, registration of Beneficiary is not required for transferring funds through UPI as the fund would be transferred on the basis of Virtual ID/ Account+IFSC / Mobile No+MMID / Aadhaar
Number. (Please check with your PSP and Issuing bank with regard to the services enabled on the App).
4. Can I link more than one bank account to the same virtual address?
Yes, several bank accounts can be linked to the same virtual address depending on the functionalities being made available by the respective PSPs. If the selected Bank name to link with UPI does not find your bank a/c, please ensure that the mobile number linked to your bank account is same as the one verified in BHIM App. If it is not the same, your bank accounts will not be fetched by the UPI platform. Only Savings and Current bank accounts are supported by BHIM.
5. What are the different channels for transferring funds using UPI?
• The different channels for transferring funds using UPI are:
• Transfer through Virtual ID
• Account Number + IFSC
• Mobile Number + MMID
• Aadhaar Number
• Collect / Pull money basis Virtual ID
6. What is the limit of fund transfer using UPI?
At present, the upper limit per UPI transaction is Rs. 1 Lakh.
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