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Do your clients know about this unique demonetization solution?


Demonetization continues to grab media headlines day after day, as realization grows that the common man's strife is going to take longer than envisaged. In all the din and noise around shortage of new notes and length of bank queues, one solution that is going relatively unnoticed is a global first pioneered by India - the Unified Payment Interface.

Yes, we have all seen ads from mobile wallet providers like PayTm, but the catch is that these work only when both parties have the same mobile wallet. What if you could have a single mobile app that allows you to make and receive payments to and from anybody, across all major banks in India, without having to worry about multiple accounts, e-wallets, card PINs, IFSC codes and passwords? Would you then have to worry about notes - old or new? Do your clients know that India now has this solution called UPI which delivers exactly this? Familiarize yourself with UPI and give timely advise to your clients on a lasting solution to their currency woes.

Next time your client goes to the local grocer and buys provisions worth Rs. 2472, she doesn't need to fret about running down her scarce inventory of currency notes. She can whip out her mobile phone, log into her UPI app of her bank (lets say its ICICI Bank) and transfer money to the grocer's account (in say Axis Bank) in a jiffy. There is no need for them to have a common e-wallet provider. Both have bank accounts, UPI simply transfers money from one account to the other - across banks, through a simple mobile app.

Towards the end of August 2016, the National Payments Corporation of India announced that UPI has now become operational and that UPI apps of around 21 large banks are now available for download in Google's Play Store (the app was initially made available for Android smartphones only). More banks are joining this initiative with their own UPI apps.

The concept of Unified Payment Interface, UPI, is the latest innovation in digital payment methods. It seeks to seamlessly facilitate payments between bank accounts through the medium of a single smartphone. It makes possible 'Peer-to-Peer' collect requests and merges several banking features to enable smooth routing of funds under one umbrella.

A person can access his/her bank account directly and pay various merchants online, as well as offline. The advantage is that there is no need for inputting IFSC codes, net banking/wallet passwords or credit/debit card details. While all platforms like iOS, Android and Windows can be used, presently apps for only Android have been developed.

How it works - registration

Steps for registering UPI enabled application:

  1. User downloads the UPI application from the App Store / Banks website

  2. User creates his/ her profile by entering details like name, virtual id (payment address), password etc.

  3. User goes to "Add/Link/Manage Bank Account" option and links the bank and account number with the virtual id

  4. Generate M - PIN:

  5. User selects the bank account from which he/she wants to initiate the transaction

  6. Mobile Banking Registration/Generate MPI

  7. Change M-PIN

How it works - transactions

The following transactions can be carried out using the UPI. The limit for transactions is Rs.1,00,000.

Pay Request: A Pay Request is a transaction where the initiating customer is pushing funds to the intended beneficiary.

Collect Request: A Collect Request is a transaction where the customer is pulling funds from the intended remitter by using Virtual ID.

Other non-financial transactions can be performed, like registration, generating one time passwords, setting and changing pin numbers, checking transaction status, raising queries and raising operational issues can be raised.

Suppose you want to send some money using a virtual address. The following is the procedure:

  1. Log in to the UPI application

  2. Select the option of Send Money / Payment

  3. Enter the beneficiary / payee's virtual id, the amount to be paid and select the bank account to be debited

  4. The confirmation screen to review the payment details opens

  5. On being satisfied that the details are correct, click on Confirm

  6. Enter the MPIN

  7. Check for 'successful' or 'failure' message

Suppose you want to receive money, the following is the procedure:

  1. Log in to your bank's UPI application

  2. After successful login select the option of collect money (request for payment)

  3. Enter the remitter / payer's virtual id, the amount to be collected and the bank account to be credited

  4. Check confirmation screen to review the payment details and click on confirm

  5. The payer will get the notification on his mobile for money request

  6. The payer will now click on the notification and open his/her bank's UPI app where he/she reviews payment request

  7. The payer then clicks on either accept or decline

  8. In case payment is accepted, the payer will enter MPIN to authorize the transaction.

  9. Transaction is now complete, and the payer will get a 'successful' or 'decline' transaction notification

  10. The payee / requester gets notification and SMS from bank for credit of his bank account

Unique features

The UPI app is a unique system and has many firsts to its credit. It facilitates:

  1. Immediate money transfer through mobile device round the clock 24*7 and 365 days.

  2. Single mobile application for accessing different bank accounts

  3. Single Click 2 Factor Authentication - Aligned with the regulatory guidelines, yet provides for a very strong feature of seamless single click payment.

  4. Virtual address of the customer for Pull and Push provides for incremental security with the customer not required to enter the details such as card no, account number; IFSC etc.

  5. Bill sharing with friends.

  6. Best answer to cash on delivery hassle, running to an ATM or rendering exact amount.

  7. Merchant payment with single application or In-App payments.

  8. Scheduling PUSH and PULL payments for various purposes.

  9. Utility bill payments, Over the Counter payments, Barcode (Scan and Pay) based payments.

  10. Donations, Collections, Disbursements

  11. Raising Complaint from Mobile App directly.


The system can boast of many benefits for customers, merchants and banks alike. For banks, the single click Two Factor authentication is a boon. Banks also enjoy universal application for transaction and the advantages of leveraging existing infrastructure. Transactions are safer and more secure. Payments can be made on the basis of Single/ Unique Identifier. The system enables seamless merchant transactions.

For customers, payment options are available around the clock, while they can access various bank accounts through a single interface. The use of a virtual ID enhances security, while the authentication function has been simplified to making a single click. Again, customers can directly raise complaints regarding service from the app itself.

Merchants also gain from the new system. They will be able to collect funds from customers using single identifiers. They can seek business even from customers who do not have credit or debit cards. The system is eminently suited for e-commerce and m-com transactions. Merchants do not have the hassle of storing sensitive data like virtual addresses of customers. The single click two factor authentication process assures smooth monetary transactions with customers.

Changing banking

UPI app will bring sweeping changes to the banking sector. According to the RBI, $80 billion worth of transactions take place by both B2B (95%) and B2C sectors. This includes credit and debit cards and net banking transactions. Banks charge commissions for these transactions, ranging from 1.50% to 2.00%. This brings them an estimated income of Rs. 18,000 crores annually. If UPI is implemented fully this income will drop to Rs. 1,800 crores. Though banks may lose, customers would gain big time.

Currently, infrastructure availability and costs act as a barrier to increased digital financial transactions. Nowhere is this truer than in the rural areas. Even the Reserve Bank of India has pointed out that though debit card usage has jumped by 15% it is still largely restricted to urban and metropolitan areas. Establishments with Point of Sale (POS) terminals number just about ten lakhs. Credit and debit cards are being increasingly used for e-commerce transactions. High costs of POS terminals, the low value of transactions in rural areas and poor availability of power and net connectivity and high maintenance costs of terminals militate against the growth of traditional electronic payment methods. Equally rural consumers are naturally apprehensive about using methods and technologies they are not familiar with, while paying cash is both easy and maintains anonymity.

Game Changer for consumers

This is where the new UPI phone based system can change things dramatically. Many of the problems regarding usage can be overcome at one stroke when integrated on to a mobile phone. The phone itself is cheap and has high penetration across all strata of society, including in rural areas. Consumers are also adept at using these instruments. Though UPI can be used only by smartphones, it will radically alter the way business is conducted.

Demonetization is indeed a jolt for the common man, and is causing near term challenges in urban and rural areas. But as they say, every challenge has a silver lining. If demonetization propels usage of UPI, it will deliver immense long term benefits to consumers and to society at large.

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