The RBI recently launched the Unified Payment Interface (UPI). The UPI is best explained as an app that enables instant, online bank payments.
What is UPI?
In really simple terms, the UPI (Unified Payments Interface) is a payments system – just like a cheque, your debit card, or a mobile wallet. The UPI, is interoperable between banks, so it doesn’t matter if you have an account with Axis Bank or ICICI Bank or Yes Bank – and that’s thanks to the NPCI (National Payments Corporation of India), which is the same organisation that enables our ATMs to be interoperable, allowing you to use an Axis ATM card in an ICICI ATM, for example.
The UPI has gone live with 21 banks including most of the major banks. Missing from the list right now is State Bank of India, but this is expected to change too.
How to use UPI?
You could use UPI apps to transfer money between friends and family or to pay your landlord, or to make a payment at a shop, or to buy something online. The money will be debited from your bank account, and transferred to the recipients account instantly and securely.
The same holds true for cash-on-delivery payments as well. While customers can pay the e-commerce firm directly, they can also pay the delivery boy using his UPI id or – better still – using the QR code the delivery boy carries on his UPI app!
UPI apps are based on the IMPS (Immediate Payment Service) system that you might have used with your netbanking app by now, and its available 24×7, even on Sundays and holidays.