UPI — India’s Way of Secure Digital Payments
By: Nikhil Vemu
Tags: Marketing, Digital Life, Business, Technology, Economy

Digital Payments

UPI — India’s Way of Secure Digital Payments

NPCI, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons

Firstly, What’s UPI?

UPI abbreviates to Unified Payments Interface. It is a platform that could link to many bank accounts and enables fast money transfer using IMPS (Immediate Payment Service). However, it needs an app to work. It’s way faster than the previous NEFT (National Electronic Funds Transfer). As it’s online, it’s available 24x7, 365 days.

It’s Origin:

It was launched in 2016 as an initiative by NPCI (National Payments Corporation of India) with support by the RBI (Reserve Bank of India) and the IBA (Indian Banks Association).

PayTM’s post on Twitter

Until then, people used to use Mobile Wallets like PayTM, Oxigen, Mobikwik, and Freecharge to recharge, and pay bills. People had to recharge their wallets every now and then to ensure there’s sufficient money inside. It was a tedious task. With the UPI platform, people could recharge and pay bills directly from their bank accounts. The sender need not remember the Receiver’s Bank Account number, IFSC Code, Bank name etc…

How to register for UPI?

To register one’s bank account for UPI, all he needs is:

A Smart phone with a UPI App installed.

A Bank account.

An active SIM card with mobile number registered with the bank.

When you install the app, it prompts you to add a bank account. Choose your bank in the list. Then, an SMS will be sent with some encrypted information to confirm if the Bank account is linked to your Phone number. Then, you’re ready! You can also link multiple bank accounts to one app.

One doesn’t need to apply for KYC, because having a Bank account, he’s already verified as a bonafide citizen.

Ways of Sending money through UPI:

By Tapping the Receiver’s name in the contact list or by typing his Mobile number. (Both the Users need to have the same UPI App)

(Both the Users need to have the same UPI App) By Scanning his Unique QR Code.

Screenshot from PayTM App (Blurred)

By entering his Unique VPA (Virtual Payment Address).

(It takes the form of phonenumber@upihandle. For example, if your Mobile number is 9876543210 and you use PayTM, your VPA would be 9876543210@paytm. Presently, we get the facility to replace the phone number with our favourite unique name)

Screenshot from PayTM App (Hidden Private Info)

By Entering his Bank details (Account number and IFSC Code).

Screenshot from PayTM app

Accepting payment request from Receiver. (Some Users use this feature to ensure there are no sender frauds. This way, the sender has no other go than sending the required money to the receiver)

Screenshot from PayTM app (Hidden Private Info)

What can you do with UPI:

PayTM’s Post on Twitter

Pay for online websites with ease. Pay at the nearest stores. Pay rents, utility bills and recharge instantly. The recent additions include paying credit card bills, cylinder booking, challan payment, Metro rail QR tickets etc… UPI 2.0 brings many features including Auto-pay and Bill-split with friends.

Popular UPI Apps:

When UPI platform was introduced, NPCI made its own BHIM as its official app for payments. Its a small app that just makes transactions and nothing much. However, with the permission for private players to provide UPI facility, those gained a lot of popularity with their own Cashbacks and offers. And BHIM went almost to zero.

The popular UPI Apps include:

PayTM Google Pay (previously Tez) PhonePe Mobikwik BHIM (Bharat Interface for Money) Amazon Pay WhatsApp Pay

These apps partner with banks to provide UPI facility. That could be observed in the UPI handle (*****@upihandle). For example, GPay partnered with Axis Bank, HDFC Bank, ICICI Bank, and SBI. That is why you could observe handles like okaxis, okicici etc… This doesn’t mean you need to have an account in their partner banks. They’re just PSPs (Payment Service Providers).

Is it secure?

UPI transactions are secured with a highly encrypted format that’s not very easy to tamper. As the use of UPI is increasing exponentially, there’s an increasing responsibility on the people behind it. The app and transactions are two-factor authenticated by the UPI App’s in-built lock feature and with your own UPI pin. Both could be changed by the user anytime.

BHIM’s post on Twitter

The strong point of UPI is that the money never leaves your bank account before the transaction is complete. There’s no intermediate step in the transaction where a third-party gets access to our money. In short, UPI payments are direct bank to bank transactions. If the transaction wasn’t successful and your money was deducted, you can be sure you’ll receive your money back within 3 working days, without the need to contact the customer care.

UPI apps are more secure when both the sender and receiver use the same UPI app. This removes the need of sharing confidential details like VPA or Bank Account number and IFSC Code. However, in the contemporary period of multiple active UPI apps, it isn’t possible often. Still, there’s no need to worry about it.

Frauds? Unfortunately Yes.

There were many cases of UPI frauds since the beginning. To my knowledge, three of the most common are:

vishing by Jorge Reyes from the Noun Project