Unified Payment Interface - a Step towards a Cashless Economy

Economic Affairs Digital Economy

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India moved a step closer towards becoming a cashless economy with the launch of National Payments Corporation of India’s (NPCI’s) unified payment interface (UPI)

Background

· A cashless economy is a system where flow of cash or physical currency is non-existent and all monetary transactions are done electronically via internet enabled banking or wallets, and debit or credit cards; at most abolishing or at times, reducing the physical presence between two transacting parties.

· Such transactions can be purchases, bill & utility payments and clearances or transfers and India moved a step closer towards becoming a cashless economy with the launch of National Payments Corporation of India’s (NPCI’s) unified payment interface (UPI).

· Touted as one of the most important innovation of the financial sector with 19 banks partnering with NPCI (an umbrella organization for all retail payments systems) to offer services based on UPI which will have a significant impact on the ease of retail payments at a time when mobile banking transactions (surged 82% over the same period the previous year) is picking up.

Characteristics

· UPI is a payment system that allows money transfer between any two bank accounts by using a smartphone.

· Unified Payment Interface (UPI) is a newly introduced platform to transfer money between any two bank accounts in India, by avoiding the existing complexities.

· UPI is an indigenous payment system which works with the help of a smartphone.

· UPI allows a customer to pay directly from a bank account to different merchants, both online and offline, without the hassle of typing credit card details, IFSC code, or net banking/wallet passwords.

· It is safe as the customers only share a virtual address and provide no other sensitive information.

· Wide range of transation like Merchant payments, remittances, bill payments among others can be performed

· The transaction limit is Rs.1 lakh

Comparing UPI and Netbanking (NEFT/RTGS/IMPS)?

· UPI is standardized across banks, which means you can initiate a bank account transfer from anywhere with a few clicks. This means that UPI will help you to pay directly from your bank account to different merchants without the hassle of typing your netbanking password, credit card details or IFSC code.

· Apart from cards, netbanking and wallets, your can now pay through UPI too.

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