National Payments Corporation of India(NPCI) launched UPI in 2016. The basic purpose of UPI is to remove all the lengthy processes like to fill the bank account number and IFSC code for the transaction and promoting Digitization.. when Unified Payments Interface (UPI) started for the first three months, the transactions were marginally equal to zero. But in the next three years, we witnessed a technology boom all around India. Now, UPI is single-handedly responsible for the ₹504 crores transactions over the month. Even many big countries like the United Kingdom(UK), France, Bhutan, Malaysia, and Oman backed India’s payments system. UPI is playing a vital role in making India a cashless economy and even helps in the fight against Black Money. RBI is the main bank that regulates all the transactions of UPI.
How Unified Payments Interface (UPI) works?
In Net-Banking we use IMPS(Immediate Payment Service) which helps in the instant transfer of money between different banks. UPI uses the same IMPS but it is only for those who carry a smartphone. Users have to open the UPI app where they need to enter the amount of money to send and enter the Virtual ID or Mobile Number or Scan the QR code of the receiver. Both the user and receiver get the confirmation of their transaction. The maximum amount that can be transferred through UPI is 1 lakh/day.
NPCL also thinks about non-smartphone and how they can be a part of these. NPCL launched AePS (Aadhar Enabled Payment System) in this users have to enter an Aadhar number and scan their fingerprint in a micro ATM to send money. The same process applies to withdrawal. The main process of AePS is to involve every citizen of India and it is not possible to set up a bank in every village. So government installs Micro ATMs in many villages.
How Does UPI Benefits other Payments System?
- Single Applications – One application is enough to have different bank accounts
- Fast Payments- It is fast in comparison to other systems.
- Security- In this Push and Pull technique used it simply means your virtual id works and your bank details like account number and IFSC code remain private
- Two Factor Authentication-This implies that the validation of your Virtual ID comes first, followed by the money transfer to your regular bank account.