UPI: All you need to know

Last Updated on July 6, 2021

We are living in a digital world. The condition is such that mobile phone has become more essential than food. It is so because a mobile phone has become a personal assistant for many things. Its wonders include online payments with the click of a button. Thanks to the phenomenal innovation of UPI. Now, online transactions are easy like never before.

Want to know more about it? Here you go.

Table of Contents

What is UPI?

Developed by the National Payments Corporation of India, UPI is an instant real-time payment system. Here, the payments can be made through an app on a mobile device only. The best thing is that you can transfer money 24×7! And that too without any charges!

Due to its ease of use, it has become a preferred payment method among people. It is evident by the fact that UPI witnessed more than 2800 Crore transactions till June 2021. It is fantastic, isn’t it? The transactions aggregated to $71 Billion! (Source: NPCI)

Minimum Requirements

You don’t have to struggle to fulfil the minimum requirements. A phone with an internet connection is sufficient for doing the transactions. Ensure that you have installed the UPI application and created an MPIN.

That’s it! You are good to go.

How does UPI work?

Firstly, the user needs to create a Virtual ID or Virtual Payment Address (VPA). For doing so, he has to link UPI to any bank account. The process does not need any recipient or payer to share bank details. So, you don’t have to worry about scams.

The VPA acts as a financial address. Hence, there is no need to remember the beneficiary account number, IFSC code, or net banking user ID/password. You just have to remember a PIN for doing transactions. At least you can remember it, right?

UPI Registration

Registration is no rocket science. You can register in 3 simple and easy steps:

  • Firstly, the user needs to download the UPI application from the App Store/Original website of the bank. E.g., Paytm, PhonePe, etc.
  • Secondly, the user has to create his/ her profile by entering details. It includes name, virtual ID (payment address), password etc.
  • And lastly, the user has to Add/Link a Bank Account with the virtual ID.

Generating M-PIN

Entering an MPIN is the key to secure transactions. As it is permanent, it frees you from the hassle of receiving OTP. Therefore, the success rate becomes high due to the absence of OTP.

You can generate an MPIN by completing the following steps:

  • Firstly the user has to select the bank account from which he/she wants to initiate the transaction.
  • Secondly, the user has to click on create/change M-PIN option.
  • Now user has to type debit card expiry date along with the last 6 digits in the relevant field.
  • And now the user has to type the OTP pin generated by his/her bank and sent to his/her registered mobile number.
  • Lastly, the user needs to set the desired M-PIN and click the Submit button.

Why Use UPI?

UPI not only benefits the customers. But merchants have their advantages as well. In short, you can call it a win-win situation for them. Here are the benefits UPI offers:

Benefits for Merchants

  • No storage risk: Debit and Credit cards contains lot of vital information. Like the name, CVV, card number, etc. It may go in wrong hands. And cause more harm than good.

But that is not the case with UPI. Only the UPI ID is known to others. So, vital banking information is protected.

  • Seamless Fund Collection: Unlike NEFT or RTGS, the transactions are processed instantly. So, the people don’t have to wait to receive funds. Also, there are no charges involved. That is why the customers are willing to pay through UPI.
  • Ease of Payment: Your customers don’t need any credit/debit card for payment. They can directly pay you from UPI linked with their bank account.
  • Better Security: It provides a single-click two-factor authentication facility to the customer. So, the safety of transaction is ensured.

Benefits for Customers

  • 24*7 Availability: UPI transactions are available 24*7. You can do it at your convenience. And you don’t have to wait for the banking hours.
  • Single Application, Many Accounts: You can add more than one bank account to your UPI ID. So, you can pay as per the availability of the funds in your account.
  • No Charges: While other payment methods may cost you, UPI doesn’t. Hence, it helps you to save transactions costs significantly, especially if you are a shopaholic.
  • Ease of Transactions: You have to enter many details while transacting through different methods. But that is not the case with UPI. You just have to enter your UPI ID and the MPIN. Congrats, your transaction is complete.

That is why it saves your time as well. And you know that ‘time is money.’

Things to Keep in Mind

  • Be aware of Mobile phishing. Ensure that you download the UPI applications from official sources only.
  • Set strong passwords for your phone and UPI application.
  • Do not share your MPIN with anybody. Not even with the bank. As it is the only protection for the transaction.
  • Use biometric authentication for your UPI app, if possible.
  • Update your mobile and applications from time to time. As new versions are considered more secure.
  • It is advisable to enable encryption. You can also download anti-virus software on the phone.
  • Keep your SIM card locked with a pin to avoid misuse.
  • In case of loss or theft of the mobile device, contact your subscriber to block the subscription of the SIM card.
  • Don’t connect your phones to unsecured wireless networks that do not need passwords to access. ‘Free Wifi may cost you much more than mobile data.’

Closing Remarks

UPI has made transactions possible at the click of a button. Due to its benefits, it has become popular, even among the banks. That is why 227 banks are live on it.

In the end, don’t underestimate the immense potential of UPI. It has the ability to transform the banking industry.

Frequently Asked Questions (FAQs)

  1. What is the daily limit of UPI?

The daily transaction limit is Rs 1 Lakhs! But it may vary from bank to bank.

2. What happens if I enter an incorrect UPI pin?

If you enter the wrong PIN, then the transaction fails. If this is repeated many times, the bank may block you from transferring funds temporarily.

3. The money is deducted but the transaction failed. What should I do?

If the money is deducted, the transaction will complete. It may take a long time due to technical issues. If the transaction failed, the money will be refunded to your bank account within a few working days. However, you can contact the bank to confirm the status.

4. Do I have to register a beneficiary before transferring funds?

Registration of beneficiaries is not required. You can transfer funds to anyone you want.

5. Do the transferee have to register for UPI as well?

No, registration is not mandatory for the beneficiary. You can directly transfer the funds through account number and IFSC code.