Understanding UPI transactions
UPI also known as Unified Payments Interface is an immediate real-time payment system that instantly transfers the funds or money between two bank accounts through a mobile interface. UPI transaction is a concept that allows multiple bank accounts to get into a single mobile platform.
What is UPI?
UPI also known as Unified Payments Interface is an immediate real-time payment system that instantly transfers the funds or money between two bank accounts through a mobile interface. UPI transaction is a concept that allows multiple bank accounts to get into a single mobile platform. The concept of UPI was developed by the National Payments Corporation of India and is controlled by the RBI (Reserve Bank of India) and IBA (Indian Bank Association).
Key features of UPI:
Some of the key features of UPI are given below:
1. Instant transfer of fund or money through IMPS (Immediate Payment Service) which is faster than NEFT.
2. Since it is completely digital in nature and has no human involvement, one can use UPI 24 hours and on all public holidays also.
3. Single mobile application for accessing various bank accounts.
4. Uses Virtual Payment Address which is a unique UPI ID given by the partner bank.
5. Uses Account Number with IFS Code and Mobile Number with MMID or Mobile Money Identifier to complete UPI money or fund transfer.
6. MPIN or Mobile Banking Personal Identification number is required for accessing.
7. Every bank provides their own UPI for different platforms such as Android, Windows, and IOS. The Partner banks may or may not charge for the UPI service.
8. UPI transactions have bill sharing facility.
9. UPI is mostly used for doing merchant payment, utility bill payments, in-app payments, OTC (Over the Counter) payments, Barcode based payments.
10. One can file a complaint from Mobile UPI App directly.
11. Using UPI one can directly view there bank balance without visiting the bank or ATM.
Security in UPI transactions:
UPI transaction interface is based on the two Factor Authentication with a seamless single click payment method. This feature of UPI is aligned with the regulatory guidelines that make it the safest. The 2 Factor Authentication is quite similar to OTP, but in UPI transaction MPIN is used instead of OTP. UPI transactions happen in a highly encrypted format.
How to set up UPI:
Once one have downloaded their chosen UPI app, they have to choose the bank from the given options in the UPI app. To verify that it is your bank account, your bank will send you a one-time password (OTP) to your registered mobile number. Once the OTP is verified by the both end, the virtual payment address (VPA) will be created.
Here is some general steps how one can set up a UPI account using a mobile app:
Step 1: Download and install BHIM UPI app from Google Play store or Apple App Store.
Step 2: Select the preferred language.
Step 3: Select the SIM or mobile number which is registered with your bank account.
Step 4: Set-up a four-digit login password known as MPIN which is needed to be entered every time one wishes access the app.
Step 5: Select and link your bank account. Set your UPI PIN by providing last six digits, CVV and expiry date of your debit card.
How do UPI transactions work:
For using the UPI service, the users need to create a Virtual Payment Address or VPA of their choice or as provided by the partners bank. They need to link that VPA to their bank account. This VPA becomes the users' financial address for transactions and different services and they need not remember the details like account number, IFSC codes, or net banking user id and password for sending or receiving money. The customer need not to enter any details over again.
Maximum limit on transfer of money:
According to the NPCI, at present, the maximum limit per UPI transaction is Rs 1 lakh per account per day. Within this maximum limit different partner banks may have their own sub limits hence one should check with the bank for the maximum limit of money they can transfer per day using UPI.
Advantages of UPI System:
The primary objectives of the UPI system is to make banking transaction smooth, easy and flexible, and also to make banking transactions easy to scrutinize and check for errors. Some of the prime benefits of UPI fund transfer are-
1. The UPI transfers occur immediately and there is no restriction of working hours or holidays (i.e. UPI transactions can be made 24X7). Furthermore, bank strikes and bank holidays do not affect UPI payments.
2. For making a UPI fund transfer one do not require any bank account number or IFSC code of the beneficiary if the beneficiary is also an UPI user.
3. Interestingly, one can transact money from several bank accounts through a single UPI app.
4. There is no need to wait for 24 hours to transfer funds to a new payee. Funds can be sent to anyone immediately without any additional processing time or fee.
Features of UPI transaction
registering to UPI app
Limits in UPI transaction
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