# What Is UPI? A Guide to Unified Payments Interface and Its Functionality

![Unified Payments Interface (UPI): A smartphone application in India that allows users to transfer money between bank accounts without entering bank details or other sensitive information.](https://www.investopedia.com/thmb/XYk7rcGqgkrmIfA9glYjEOo0qxg=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Unified-payment-interface-upi_final-76629e7fb7bb4bbca0068eabf39a78ea.png)

*UPI is used on mobile devices in India to facilitate instant peer-to-peer (P2P) and person-to-merchant (P2M) transactions.*

## What Is a Unified Payments Interface (UPI)?

The Unified Payments Interface (UPI) is a transformative mobile payment system developed by the National Payments Corporation of India (NPCI). It allows users to securely transfer money between bank accounts using just a smartphone app, bypassing the need to enter sensitive bank details each time.

This streamlined process, regulated by the Reserve Bank of India (RBI), has contributed significantly to the growth of digital transactions in India. Since its pilot launch in April 2016, UPI has made peer-to-peer and inter-bank transfers easier, safer, and more accessible for millions of users.

### Key Takeaways

*   UPI is a real-time payment system developed by the National Payments Corporation of India, enabling bank-to-bank transfers via smartphones.
*   Regulated by the Reserve Bank of India, UPI ensures secure transactions without the need for entering sensitive bank details.
*   The system uses Immediate Payment Service (IMPS) and Aadhaar Enabled Payment System (AEPS) for seamless money transfers.
*   Users can perform transactions without physical cash, credit, or debit cards, ensuring financial security and convenience.
*   UPI is available for users in India and internationally, allowing global transactions to India via various banking apps.

## Exploring the Mechanics of UPI Transactions

The Unified Payments Interface is a real-time payment system. It is designed to enable peer-to-peer inter-bank transfers through a single two-click factor authentication process. The interface is regulated by the [Reserve Bank of India (RBI)](https://www.investopedia.com/terms/r/rbi.asp), India's central bank. It works by transferring money between two bank accounts along with a mobile platform.

The pilot system launched in India on April 11, 2016, and banks began uploading their interfaces in August 2016.

UPI uses systems like Immediate Payment Service (IMPS) and Aadhaar Enabled Payment System (AEPS) for smooth account settlements. It facilitates push (pay) and pull (receive) transactions and even works for [over-the-counter](https://www.investopedia.com/terms/o/otc.asp) or barcode payments, as well as for multiple recurring payments such as utility bills, school fees, and other subscriptions.

> **Important**
>
> In 2021, $940 billion was transacted over UPI, and by 2022, monthly transactions averaged over six billion.

Once a single identifier is established, the system allows mobile payments to be delivered without the use of credit or debit cards, net banking, or any need to enter account details. This would not just ensure greater safety of sensitive information, but connect people who have bank accounts via [smartphones](https://www.investopedia.com/terms/s/smartphone.asp) to carry out hassle-free transactions.

Overall, UPI leads to fewer cash transactions and may help reduce the [unbanked](https://www.investopedia.com/terms/u/unbanked.asp) population.

## Understanding UPI Transactions: Sending vs. Receiving Money

Sending money on the UPI is called a "push." In order to send money, the user logs into the interface and selects the Send Money/Payment option. After entering the recipient's virtual ID and the amount desired, they choose the account from which the money will be debited. The user then enters a special [personal identification number (PIN)](https://www.investopedia.com/terms/p/personal-identification-number.asp) and receives a confirmation.

Receiving money through the system is called a "pull." Once the user has logged in to the system, they select the option to collect money. The user then needs to enter the virtual ID for the remitter, the amount to be collected, and the account in which they will deposit the funds. A message then goes to the payer with the request to pay. If they decide to make the payment, they enter their UPI PIN to authorize the transaction.

After the transfer is complete, both the sender and recipient get a confirmation text on their smartphones.

## The Range of Services Available With UPI

A number of key features are offered by UPI. Users can access balances and transaction histories, along with sending and receiving money. To send money, users need an account number, the Indian Financial System Code (or IFSC, which is an alphanumeric code that facilitates electronic transfers), the mobile number of the recipient, and a virtual ID or Aadhaar number (which is like a Social Security number).

## Is UPI Available in the U.S.?

Yes, UPI is available in the U.S. You are able to send money to India from the U.S. using UPI. You need the UPI ID of the receiver and can use a variety of banking apps, such as Wise, World Remit, and Remitly.

## Which UPI Systems Can You Use in India?

The UPI systems that you can use in India consist of many banking/payment apps that allow you to use UPI. These include PhonePe, Google Pay, Axis Pay, and BHIM.

## Is UPI Safe in India?

Yes, UPI is safe in India. It is regulated by India's central bank, the Reserve Bank of India.

## The Bottom Line

The Unified Payments Interface (UPI) in India is a secure and efficient mobile payment system regulated by the Reserve Bank of India. It streamlines transactions by eliminating the need for cash or card details and supports both peer-to-peer and inter-bank transfers. Since its inception in 2016, UPI has transformed financial transactions in India by enabling hassle-free payments and reducing reliance on cash, thus fostering greater economic integration. By using existing systems like IMPS and Aadhaar Enabled Payment System, UPI ensures seamless and secure money transfers, making it a vital tool for the country's digital economy.

> **Article Sources**
>
> 1.  NPCI. "[Unified Payments Interface (UPI)](https://www.npci.org.in/what-we-do/upi/product-overview)."
>     
> 2.  International Monetary Fund. “[Digitalization of Public Finance and Digital Public Infrastructure: Opportunities and Challenges](https://blog-pfm.imf.org/en/pfmblog/2022/12/digitalization-of-public-finance-and-digital-public-infrastructure-opportunities-and-challenges).”