UPI stands for Unified Payments Interface. It's a true game changer in how payments are made in India. The demonetisation saga of 2016 arguably had a significant role in driving the adoption of digital payments in India. As of January 2023, 8 billion monthly transactions occur via the UPI system. It puts India and the Indian payment system on the world map in terms of technological advancements, given the sheer scale. In this article, we cover some benefits of using the UPI system, including for things other than making payments.

A True Digital Payments Unifier

The UPI is a payment ecosystem created by the National Payment Corporation of India (NPCI) as a one-stop solution for all digital payments. All UPI transactions are per government regulations through Virtual Payment Addresses (VPA) or UPI IDs.
To make UPI payments, you must download a UPI app, create a unique ID linked to your bank account and mobile number, and authenticate with a four or 6-digit PIN. Transfers can also be made via QR code scanning or by entering the recipient's mobile number. The availability of options varies by UPI app, but most have both options.
Several apps in India embrace UPI, like PhonePe, Google Pay, and Fi Money. All these platforms offer free payments - meaning that you will not incur any charges to make payments.

Why India Prefers Using UPI to Send & Recieve Money?

The UPI platform is much more than just instant transfers. UPI-based mobile apps allow you to do much more, from checking your transaction history to your account balance.

• You can link multiple bank accounts to the platform and make seamless payments.
• As the regulatory authority monitors it, it is entirely safe and secure.
• Payments happen through virtual addresses. So there's no need to remember your bank account number, IFSC code etc.
• UPI IDs also safeguard you from data breach issues.
• You can use the UPI ecosystem round-the-clock, even on holidays, after bank working hours, literally any time.
• Paying utility bills and recharging your phone is super easy with UPI.
• As a merchant, you can make vendor payments and manage invoices smoothly.
• In case of payment issues, you can register complaints on your UPI app.
• Regular payments through UPI-based mobile apps can fetch you in-app vouchers and cashback offers.
• If you're always out of change, UPI is your saviour. The platform allows transactions in the exact amount owed.

Disadvantages of UPI Payments

Despite the platform's numerous benefits, you cannot use it without a smartphone and internet connection for transactions. UPI Lite addresses some drawbacks since it allows for transactions without an internet connection and UPI PIN. However, here the transaction limit is capped at ₹200, unlike the regular ₹1 Lakh per day limit.

Benefits of Using UPI

Apart from sending money to someone's UPI ID (or VPA) and checking your account balance, you can use the UPI system for other things. Here's a summary:

1. Sending money to someone without a VPA (UPI ID): You can send money directly to someone's bank account without adding them as a beneficiary (like in the pre-UPI days). If you have the account number, IFSC code and account holder name, money transfer is a 3-step process.
2. Sending money to a UPI-linked phone number: UPI IDs take much work to remember. If you have someone's phone number, that's all you need to find them on a UPI app and send them money.
3. IPO subscriptions: When a company goes public, in the run-up to the IPO, you can subscribe to the IPO as a retail investor through UPI apps like Google Pay.
4. Making auto-payments: As an alternative to credit card auto-payments, the RBI introduced UPI-based auto-payments that use your standing instructions to debit a certain amount every month. You can use this for your OTT subscriptions (like Netflix etc.)

Latest in the World of UPI Payments: Get Direct Access to Credit

The Reserve Bank of India (RBI) on 4 September 2023 has announced an extension of the UPI's capabilities by allowing pre-sanctioned credit lines from Scheduled Commercial Banks to be used as funding accounts for transactions conducted through the UPI system. This means individuals can now make payments via the UPI System using a pre-approved credit line from a Scheduled Commercial Bank with prior consent. 

Conclusion

The Unified Payments Interface (UPI) has emerged as a true unifier in India's digital payments landscape. The UPI system overall has about 450 million users, making it a true powerhouse of a payment system. With its seamless and secure payment ecosystem, UPI has facilitated instant transfers and a wide range of financial activities. UPI offers unparalleled convenience and efficiency, whether checking transaction history, paying utility bills, managing invoices, or making auto payments. Furthermore, its association with UPI Lite addresses some limitations by enabling transactions without an internet connection and UPI PIN.

Learn more about how UPI is going international here: https://www.youtube.com/shorts/uy-TBVkiHJ4

Fi Money App: Lightening Fast Payments

With Fi Money, you can conveniently open a zero-balance savings account within minutes without any paperwork or hidden fees. In collaboration with its licensed partner Federal Bank, Fi represents the future of secure and digital banking. By leveraging Fi, you can save money, make wise investments, analyse your expenses effectively, and make lightening fast payments via UPI, NEFT, RTGS, etc. Upgrading to other account plans within Fi unlocks premium features such as Jump, US Stocks, Mutual Funds, and more, accompanied by the added benefit of up to 4x rewards.

Frequently Asked Questions

1. What is UPI?

The full form of UPI is Unified Payments Interface. It allows quick, real-time fund transfers between banks via a mobile-based platform. It's built on the IMPS infrastructure via the National Payments Corporation of India (NPCI).

2. Advantages of UPI payments?

Here are some of the advantages of UPI:

• It's a secure platform.
• 24x7 fund transfers - without IFSC codes.
• Can link multiple bank accounts to the platform.
• Pre-authorised bill and merchant payments.
• Fast & free-of-charge transactions

3. Is UPI necessary for a money transfer?

UPI is among the simplest and fastest ways to transfer money within India, but there are other ways. For this, you'll need to download a UPI-based app. It can be your bank's or third-party apps, like Fi Money (which works with a licensed partner, Federal Bank). To begin transacting, you must link your bank account and mobile number to the app. Transactions done via UPI are entirely free.

4. How are UPI payments helping the Indian economy?

UPI is a digital payment system backed by NPCI and RBI that allows instant interbank fund transfers via mobile app without entering bank details or adding a beneficiary. It has played a crucial role in India's move towards a cashless economy by providing a secure digital wallet for easy bill and merchant payments.
Per the NPCI database, transaction volumes on UPI have grown multifold from 2 million in December 2016 to 7.8 billion in December 2022, while the transaction value has risen from ₹7 billion to ₹12.8 trillion in the same period