What Is UPI?

UPI is a simple and effective way to transfer money between two bank accounts in India by using a smartphone. It is built on Immediate Payment Service (IMPS) and allows you to transfer money between two bank accounts by using a unique identifier like an email address – usually known as VPA (Virtual Payment Address) without the need to know the account number and IFSC (Indian Financial System Code) details of beneficiary.

Why UPI? Why Now?

While there are various ways to perform digital money transfer including but not limited to NEFT, RTGS, Wallets, NFCs, UPI is built on top of IMPS (which operates 24x7) and has been adopted by majority of banks in India.

UPI simplifies money transfer by masking the need to know the destination bank account details such as account number and IFSC details.

The payments can be both sender (payer) and receiver (payee) initiated, and are carried out in a secure, convenient and integrated fashion.

You do not have to remember bank account details or keep your wallets topped up. The money that remains in your account earns interest and on need basis you may transfer funds in a simply manner and securely.

With Prime Minister Narendra Modi taking the right steps to reduce the use of unaccounted money kept as cash by demonetising, honest citizens may start to use UPI now to avoid the need to use cash. Further, unlike other solutions, the money resides in the bank account and continues to earn interest.

What Is VPA?

VPA uniquely links the identity of the account holder with his/her bank account.

Typically, VPA has a format like <chosenname>@<BankName>. For example, the author’s UPI VPA ID is digital@cnrb – digital is the chosen name and cnrb is the Canara Bank UPI VPA suffix.

With VPA, there is no need for you to share private and confidential information like mobile phone number, bank account number and IFSC details.

What Are The Prerequisites For Having UPI?

You need to have a smartphone with data connectivity. You must also have your mobile number registered with your bank and should be able to receive SMS from your bank on this number. Your account needs to be enabled for mobile banking/SMS alerts to use UPI.

How Do I Adopt UPI?

You may download one of the UPI apps from the play store: