What is UPI, UPI Lite and How Does UPI Works?
Nowadays most people are digitally making their money transactions. Digital transactions include our conventional internet banking platform, digital wallets like Paytm or Google Pay, and mobile banking apps provided by banks. UPI payment is the newest in this category.
Let us discuss the UPI payment method, UPI full form, and how UPI works.
What Are UPI Payment and UPI Full Form?
The full form of UPI is Unified Payment Interface which is the latest in the digital money transaction system introduced by the National Payment Corporation of India (NPCI).
It is controlled by the Reserve Bank Of India (RBI ) and the Indian Banks Association (IBA).
This transaction can be done through a UPI payment app developed by NPCI or through individual UPI apps by different banks.
This payment system enables its user to do instantaneous money transactions between two banks. This payment concept allows adding multiple bank accounts to a single mobile platform.
Related: How Can Do Smartphone Malware Protection Against Mobile Malware?
How Does UPI Work?
As the UPI full form indicates it is a unified payment system and all our transactions can be done from here.
All the transactions in the UPI payment system are based on a Virtual Payment Address (VPA).
What is VPA in UPI payment?
VPA in UPI payment is nothing more similar to our e-mail ID like [email protected] In the UPI payment system, a user has to create a VPA and it should be linked to their bank account.
VPA is an abbreviation for Virtual Payment Address, which is also known as the Unified Payment Interface (UPI) ID. After generating an ID from a UPI application such as Google Pay, PhonePe, Paytm, and others, the VPA assists users in enabling UPI services.
The creation and linking of UPI VPA is a one-time process and this virtual address is your payment ID for all transactions through the UPI system.
The VPA is the only piece of information needed to transfer or receive funds from other users and no need to remember the account number, IFSC code, and other internet banking credentials. You are sending or receiving money between two Virtual Payment addresses only.
Is UPI Payment Secure?
As per the latest information, the UPI payment system is as much as secure as the normal internet banking system. As mentioned earlier it is under the control of NPCI which is controlling interbank transactions in India.
We already explained the security steps involved in UPI payment in the ‘ How does UPI work ‘ section. Moreover, the UPI payment system is based on single-click two-factor authentication.
In two-factor authentication, the first is protected by the Virtual ID and the second is MPIN or UPI pin which is similar to OTP.
How Can Use the UPI Payment System?
We have already seen UPI’s full form in banking and how UPI works.
For doing UPI transactions you have to install and activate a UPI Payment app on your smartphone.
There are plenty of UPI payment apps are available which include the BHIM UPI app from NPCI itself.
Also, there are almost all banks have their own UPI app which can be downloaded from their website or application stores such as Google Playstore or Apple App store.
Alternatively, you can use UPI apps from digital wallets such as the Paytm UPI app, Amazon UPI app, etc. It is very difficult to figure out the best UPI app.
Once the application is installed, the basic setup or UPI registration is almost the same in all apps even though there are changes in interfaces.
These changes are easily available on your bank’s website.
The main thing in UPI registration involves the creation of a Virtual ID. This is similar to the format [email protected]
You will get the option to create a virtual ID in the UPI app or the bank’s mobile app itself.
Once you created your Virtual UPI ID and linking of your bank you are ready for a UPI transaction.
Major UPI Apps in India
Some banks released separate UPI apps and others have integrated the UPI payment feature into their mobile banking app itself. The following are the important UPI apps in India.
- BHIM app
- Google Pay
- Amazon Pay UPI
- SBI BHIM app
- Ais Pay
- Lotza from Federal bank
Some of these apps offer a substantial amount of cashback and third-party vouchers for each transaction. We are most impressed with Amazon Pay UPI, which provides a wide range of offers that are extremely beneficial if you do online shopping on Amazon.
How Do You Set Up the UPI Payment App?
As we have seen earlier, several UPI payment apps are available from leading banks and different payment companies. The basic configuration and setup of these apps are the same, even though there are small changes in their interface.
You can use this UPI app to make money transactions simple, quick, and easy manner. You can also transfer money directly to other bank accounts if you know the receiver’s UPI ID.
Here we’re having to look at the BHIM app from NPCI. BHIM UPI’s full form is Bharat Interface for Money. Let’s go through the steps to set up the BHIM UPI app.
- Download and install the BHIM app from the Google play store or Apple app store.
- Select your desired language.
- Create a UPI ID or VPA
- Select the SIM with the mobile number registered with the bank.
- Set up a 4-digit login password for the app.
- Link your bank account with UPI.
- Set up a UPI PIN by entering the last 6 digits of your debit card and the expiry date.
- Your account is registered and ready to use the UPI app for transactions.
Those who do not have a smartphone to install the UPI app can also use these features by dialing *99# from their normal mobile phone.
UPI Transaction Limit and UPI Charges
Normally UPI transaction limit is Rs.1 Lakh per day per transaction on almost all apps.
As of now, there are no UPI charges for transactions imposed, and there will be a nominal charge shortly.
Things to Be Taken Care of While Doing UPI Payment
The important feature of the UPI payment system is that it is very easy to make transactions at any time through mobile phone apps.
But somehow we have to take care of certain things while using this system.
Related: How to protect your bank account from hackers?
The Unified Payment Interface (UPI) is one of the most powerful payment transactions in the country.
We have already understood how UPI works. The following are some of the ways you can make your digital payments safer.
1. Do Not Give the Password to Anyone:
We think the matter is very clear from the heading words itself. After all, we’ve all been using passwords for years.
Often we may write these passwords on paper to remember them easily or there may be chances to share them with someone we trust in a public place. But, these are harmless ways to get out of your password.
Do not exchange your password or UPI PIN with anyone. For those who fear having forgotten the password, use a password manager, and never write it down.
2. Keep Your Pin Personal:
We use PINs or personal identification numbers to verify our identity. We also use the PIN to prevent someone else from using our phones.
Digital payment applications like Google Pay also require a PIN. It has two-factor authentication to verify your identity before allowing you to access this app.
Therefore, don’t share the mobile PIN or UPI Pin with anyone, even with people you trust or who claim to be Customer Care representatives, because this will make the information on your phone and apps public.
3. Recheck the Amount When You Are Doing Transactions:
It is difficult to remember many transactions when we make more payments online.
When you use the UPI app to purchase goods, you will receive a collection request and the payment will be completed only if you approve it.
You cannot make money through UPI app without your authorization. Therefore, when receiving the payment request, verify them clearly and confirm the amount of that transaction and then only approve it.
4. Always Keep the Exact Customer Care Number:
If something goes wrong with your digital payment, you will need to share it with someone authenticated to solve it.
In such cases, simply call the official number provided on your payment application’s official social media channels or website.
If you are seeking a solution to an incorrect number, it may guide you to a more problematic condition. Most UPI payment apps provide 24-hour customer service.
5. Reject Payment Collect Request from Strangers:
Sometimes, a stranger may send payment collection requests to your UPI ID. This can be confusing. If you are not familiar with the request sender, please refuse the request.
Apps like Google Pay usually provide a ‘scam’ warning to remind you if that person isn’t on your contact list. Read these warning messages and act carefully.
UPI Lite for Small Transactions
What is UPI Lite?
UPI Lite is a ‘wallet’ within the UPI app that allows for single transactions of up to Rs.200.
A maximum of Rs 2,000 can be stored at any given moment. If you enable ‘UPI Lite,’ all payments under Rs 200 will be routed through this wallet.
They are not required to input their UPI PIN for each transaction. Also, the transaction is speedier because it is done using a phone wallet.
Is UPI Lite launched?
The ‘UPI Lite’ service has been launched, allowing users to transfer money up to Rs 200 without entering their UPI PIN.
Currently, the service is only accessible on the BHIM app, but it will soon be available on platforms such as Google Pay, PhonePay, and Paytm.
According to NPCI, there will be an option to send money without using the internet (offline), although this service is not yet accessible now. It might happen shortly.
Account holders of State Bank of India, Union Bank of India, Canara Bank, Indian Bank, HDFC Bank, Kotak Mahindra Bank, Punjab National Bank, and Utkarsh Small Finance Bank can access the UPI Lite service in the first phase.
How will UPI Lite work?
Users should deposit money from their bank accounts to the UPI Lite wallet. Then they can transfer any amount up to ₹200 simply and quickly. Because it is an on-device wallet, users will not require the internet to make real-time payments.
Regular small-amount transfers via UPI fill bank passbooks and statements. But in this case, they originate from the UPI Lite Wallet, and transactions up to Rs 200 will not be reflected in the bank statement or passbook.
Instead, there will be just one transaction in which money would be added to the wallet. You will get an SMS with a daily breakdown of UPI Lite transactions.
At the moment, only debit from your wallet is allowed, and all credits to UPI Lite, including refunds, will be transferred straight to your bank account.
According to NPCI, in phase one, UPI Lite would handle debit transactions in near-offline mode while credits into the account will be done online. However, there is a proposal to make UPI Lite offline in the future so that customers may perform both debit and credit transactions completely offline.
Frequently Asked Questions
UPI ID is a virtual ID to be created while registering for UPI payment. It is a unique ID similar to an email ID.
No. It varies depending on the application.
The UPI lite transaction limit is ₹200, and users can easily and quickly transfer any amount up to ₹200 in a single transaction.
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Thanks for your valuable information.I read your article and it is interesting. Now i feel the role of UPI in my life. In this pandemic situation,this UPI mode transactions is help to increase my payment options more secure and easy.millions of Indians are using UPI mode transactions.here i suggest a simple and highly secured UPI payment app. please download from playstore and app store.