What is UPI? Full Form, How It Works & Benefits in India
5 min read | 2 months ago
What is UPI? Full Form & How It Works in India
You must have heard of UPI, a revolutionary system for financial transactions in India. Ever wondered about its full form and how it actually works? Let us look at both these aspects closely below.
UPI Full Form & Meaning
UPI stands for Unified Payments Interface. It makes financial transactions simpler and faster by facilitating transfers between bank accounts via mobile apps. Multiple banking services can thus be integrated into one platform, making it more convenient for customers to manage transactions and take care of their finances. The UPI ID is also called the VPA or Virtual Payment Address. It is another unique identifier that helps receive payments directly into bank accounts. It thus takes away the need for conventional bank details.
Key Features of UPI
Some of UPI’s key attributes include the following:
- Instant transfer of money through mobile devices on a 24-7 basis (365 days)
- One mobile app for managing multiple accounts with 2 factor authentication (single click). Payments can be made anytime with end-to-end encryption for transfers
- Virtual customer address to enhance added security. There is thus no need to enter the card and account number along with the IFSC code
- QR Code-based transactions along with single-application or in-app merchant payments, utility bills, and more
- UPI is a unified platform bringing together all participants like the Payer PSP, Payee PSP, remitter bank, beneficiary bank, account holders, merchants, and the NPCI
UPI ID, PIN, and Money Transfers
Here is an overview of how UPI works.
UPI ID and Payments
You have to first link your bank account to your UPI-enabled mobile application and generate a unique ID as your address for digital payments. You can enter the beneficiary’s mobile number or UPI ID for making payments, using a PIN or biometric authentication to approve transactions. The funds are then transferred instantly to the recipient’s bank account.
Setting Up the ID and Bank Account
Download the UPI-enabled mobile application you prefer and install it on your phone. Then open the application and follow the instructions to create the UPI ID. You have to add your bank account number and IFSC code, before verifying the same with an OTP sent to your mobile number.
Generating the UPI PIN
The UPI PIN can be a 4 or 6-digit code that you will use to confirm payments/transactions. You should never share this with anyone. You can generate the PIN by first tapping on Profile in the app and choosing UPI & Linked Bank Accounts in the Payment Settings section. Choose the linked bank without the UPI PIN and tap Set PIN. Enter the last 6 digits of your card and the expiry date before verifying with an OTP sent to your mobile number. Enter your chosen UPI PIN and click on Submit to complete the process. The steps may vary across UPI apps and platforms.
Finding the UPI ID
You have to open the app and then go to the Profile, Bank Account, or any other similar option. Choose your bank account and then find the ID under the section called UPI IDs or something similar to this.
Transaction Limits
You can transfer up to a maximum of Rs. 1 lakh at a go in most cases. The daily transaction limit is also up to Rs. 1 lakh, although it may vary across banks.
UPI Reference Number
The UTR or Unique Transaction Reference is the 12-digit UPI reference number that is automatically generated for every transaction. You will see this under the amount that you sent or deposited. It will help you identify and track transactions, while you can also use it to get your issues addressed or payment statuses checked by the bank.
Conclusion
UPI has completely transformed the way we send or receive money today along with making payments simpler and faster. In fact, they also have several advantages for merchants including instant payments, higher convenience and security, and lower fees in comparison to conventional payment methods. At the user end, the same convenience applies with instant and secure transactions and zero additional fees.
So, if you haven’t started using this revolutionary payment method yet, download any reputed UPI-enabled app and set up your account at the earliest. If you wish to open a savings bank account with a high interest rate, multichannel access and prompt customer support, consider Unity Small Finance Bank.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
