In order to promote cashless transactions and move towards hassle free payments or digital money and ultimately increase financial inclusion, National Payments Corporation of India (NPCI) will launch world’s first unique payment system requiring just a single unique identifier to make transaction called as unified payments interface. Launch date is April, 2016.

• It is an interface through which account holder of one bank can transfer/receive money to someone having account in same/different bank through smartphone.
• Multiple bank accounts can be linked to a single cell phone.
• There would be no need to enter bank account details such as account number, OTP etc.
• Transaction can be carried out by entering either 10 digit Aadhar card number, 10 digit mobile phone number.
• Bank customers can also make payments for various services such as online shopping, cab services and others.

How it works?

1. Banks will have to first enable UPI system
2. Customers will have to ask their banks to connect them to the UPI system.
3. For making any transaction, two options are available i.e. you can either global or local address.
4. Global address means mobile number, Aadhar number and bank account number.
5. Local address means a virtual address, which banks will provide you.
6. So if you want to make payment through smartphone, let’s say to a grocery store owner then just provide your virtual address to the owner. Normally you provide either the bank account number or swipe your credit/debit card and enter security PIN.
7. Owner will then enter this address in his mobile phone.
8. You will then receive message on your cell phone requesting authentication.
9. You need to then authenticate this transaction by entering a password. So if you receive any unauthorized request, it can be easily rejected.
10. If all the steps go correctly, transaction will be successful.
11. Money will be directly debited from your bank account and get credit into the bank account of the service provider. In this case, grocery store owner.
12. Thus neither the taxi driver nor you, would be required to share each other’s bank account details. And there is no need of swiping debit/credit card, keying in your confidential PIN.

Features of UPI:

• It will work on real time system
• It would be available 24*7
• The transactions are carried out in a highly secured environment which nullifies any kind of risks.
• Transactions can be done between person to another, entity to person and vice versa
• Virtual payment address can be a combination of IFSC code and bank account number (e.g. 98765@ifscnumber) or account id (e.g. 012345@bankname) or aadhaarnumber@aadhaar.npci or 10digitmobilenumber@mobile.npci. This address will be mapped by the respective bank with the account details of the customer.
• Most importantly, NPCI will earn 50 paise for each transaction. Now if you, carry out this transaction using Mastercard or Visa or others, then transaction charge is high. Moreover this money moves out of India. But with UPI, money will flow within the country. Check out difference between RuPay debit card and Mastercard.

Benefits of Unified Payments Interface:

• Direct benefit transfer, a government scheme will gain more boost.
• Since cash transactions will be reduced it will reduce the cost of producing paper money or currency coins.
• Transaction charge would be less compared to what we currently to international players offering mastercard or visa card.