UPI the new, improved cashless transaction mode

Posted by sonal deo on February 24th, 2017

You have money in the bank, but no cash. You have money in your wallet, but no change. In the wake of demonetization, people are trying to find ways of transacting that does not involve cash. Net banking, mobile banking, mobile wallets etc have become the new buzzwords. But there’s a new payment interface, called the Unified Payment Interface or UPI, which promises a better way of going cashless.

So, here’s what UPI exactly is

UPI (United Payments Interface) is a system that allows you to pay for products or services you buy. You can pay for your groceries or the plumber, you can pay your rent or doctor’s fees, you can buy vegetables, even a TV through a UPI-enabled app on a smartphone.

If you have used net banking to instantly send money to someone, you may have come across IMPS (Immediate Payment Service). UPI is based on IMPS, and was launched by the NPCI (National Payments Corporation of India) in September 2016.

The UPI advantage

With UPI, you can send and receive cash instantly, you can make and receive payments for products and services. It uses a safe, two-factor authentication; it’s available round the clock.

UPI is interoperable between banks. What this means is that it does not matter where you have an account, you can use any bank’s UPI-enabled app to do your transactions (20+ banks are already enabled for UPI), similar to using any bank’s ATM to withdraw money.

Upi Payment vs other payment systems

UPI is much simpler than net or mobile banking. NEFT and RTGS, the two main ways of transferring money between bank accounts, have a slight delay in sending money and funds getting credited. With IMPS, the transfer is instant. But the more fundamental issue with these systems is that you need to add a beneficiary, which can take anywhere from 30 minutes to 8 hours depending on the bank, and you also need to have many details of the beneficiary. Through UPI, you can send money instantly – all you need is the unique payee ID of the person you are sending it to.

UPI is safer and simpler than credit or debit cards. You can pay using UPI at many places where a credit card may not be accepted – your local vegetable vendor, for example.

Upi Payment is similar in many ways to wallets, but also different in fundamental ways. A mobile wallet is a wallet service that you load cash into from your bank account or credit card, and then use it wherever it is accepted. Mobile wallets have a limit of Rs 10,000 for non-KYC customers. UPI is an easy way to access your bank accounts through your smart phone with just an mPIN and without limits.

Until UPI gains traction…

Like all new technologies, UPI too will take time to reach mainstream adoption. The biggest problem with UPI currently is that it is not as widely accepted as cards or even wallets. Mobile wallets have invested time and money in increasing adoption and adaptability.

Upi Payment is a great service, and can boost our way into a cashless economy. But till acceptability picks up, adoption might not.

 Source : http://bit.ly/2h9T8OH