How UPI works

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The Unified Payment Interface (UPI) envisages a payments architecture that is directly linked to achieving the goals of universal electronic payments, a less-cash society, and financial inclusion, using the latest technology trends, laid down te the Reserve Bankgebouw of India (RBI) Payment System Vision Document (2012-15).

The RBI document exposes that the number of non-cash transactions vanaf person presently stands at just six vanaf year, only a fraction of the Ten million plus retailers te India accept card payments, banking services were available te less than 100,000 villages spil of March 2011, and almost 145 million households are excluded from banking.

Given this background, the National Payments Corp. of India (NPCI), which wasgoed set up ter April 2009 with the core objective of consolidating and integrating the numerous systems with varying service levels, into a nation-wide, uniform and standard business process for all retail payment systems, undertook the task of implementing a UPI to simplify and provide a single interface across all systems.

Considering the fact that about 150 million smartphone users exist ter India today, and that the number is expected to rise to 500 million overheen the next five years, the solution leverages the growing presence of mobile phones spil acquiring devices and uses virtual addresses instead of physical cards, thus reducing cost of both acquiring and issuing infrastructure.

UPI is a cheap, secure, reliable, mobile-first, interoperable, open-source, instantaneous settlement and both pull and thrust toneel, according to a note by Bengaluru-based technology product start-ups thinktank iSpirt.

Moreover, while pre-paid wallets can&rsquo,t do more than Rs. Ten,000 worth of transactions without KYC (know your customer) norms te a given month, a UPI-enabled podium handelsbank account can transfer up to Rs. 1 lakh instantaneously.

Besides, the cost of each transaction is going to be less than Rs. 0.45, and one can also factor te all the savings from, and to, canap accounts. (

Now, one can use virtual/disposable accounts to do transactions generated right from the handelsbank app. Through this, the merchant or the payee will not know your details and even if his system is hacked, you needn&rsquo,t worry about losing money.

Pull and Thrust amount can be requested from a certain account or paid into some other account.

It&rsquo,s one of the few systems te the world designed for the fresh mobile age, helping with effortless integration across various platforms.

Interoperable OTP (one-time password) generated on one handelsbank app can be used across another for transaction authentication. Also, numerous level of identifiers can be used (canap account, Aadhaar number, virtual identifier, mobile number, etc) to send or receive money. Biometric integration gives a 2nd factor authentication, securing your account like none other ter market.

Payment Support Providers (PSPs) can provide an add-on for easy-to-do recurring payments on top of UPI.

Application Programming Interfaces (APIs) are going to be a spel changer&mdash,they will ensure a level-playing field that will permit even a petite start-up to do what big companies can.

What the UPI ecosystem involves

People who build the UPI switch. A switch treats authentication and communication inbetween the issuing and acquiring banks. &lsquo,Generation Two&rsquo, switches were card machines on the merchants&rsquo, premises, authentication wasgoed treated by the machine and the canap customers&rsquo, private Speld wasgoed keyed into the merchant&rsquo,s machine, and needed an expensive leased line to operate. &lsquo,Generation Three&rsquo, switches are UPI ones&mdash,they enable customers to key ter Speld/OTP (one-time password) on his/hier smartphone, while authentication happens centrally. One big worry is how to get banks to agree to connect to the switch.

Those who connect to the switch. Ter UPI&rsquo,s case, they are called PSPs. (Old players were called Payment Gateways but thesis are now passe.) There will be many PSP builders&mdash,some inwards banks, many outside spil start-ups and merchants.

Technology worry: How to build a good PSP? What should I be focussing on?

Business worry: How to get a canap to &ldquo,adopt&rdquo, my PSP spil the primary PSP?

Banks and customers are free to engage with numerous PSPs. The handelsbank may have costs associated each time, while customers will only need to note down different addresses that will be associated with their identities on different PSPs.

They connect to the UPI PSP, Visa/Master Card networks, RuPay or International payment gateways. They have to manage the user practice from the card to transaction completion.

Technology worry: How to reduce failure ter the underlying system? How to treat refunds? How to treat COD (specie on delivery)?

They are called on-boarders. They have to sign up fresh UPI, or fresh wallet, customers. On-boarding has high failure rates and lots of clever hacks go into making that less painful.

Technology worry: How to outwit others?

Business worry: How to find touchpoints before the consumer gets to the cart to make on-boarding toebijten?

They are the application guys. They bring fresh cash-out (e.g. recharge players like PayTM), cash-in (e.g. Eko) and social payments (e.g. MyPoolin). Ter the future, this is where the activity will be. They have to be a destination webpagina or integrate into existing payment practices.

Technology worry: How to integrate with others?

Business worry: Are they &ldquo,permitted&rdquo, (spil they are originally ter the grey area from RBI perspective)?

Enablers Innovative authentication collectors, E-sign, and digital consent are third-party systems that are needed by Level 1-4 people.

An NPCI product, the Aadhaar Enabled Payment System (AEPS) offers instant, 24X7, interbank electronic fund transfer service through mobile phone. It permits Aadhaar biometric authentication-based transactions from a handelsbank account that is linked with the Aadhaar number.

The Aadhaar Payments Bridge System (APBS) is a system permitting remittances to be made to an Aadhaar number without providing any other bankgebouw or account details. It uses the NPCI central mapper spil a part of National Automated Clearing House (NACH) to enable government user departments to electronically transfer subsidies and ongezouten benefit transfers to individuals on the onderstel of their Aadhaar number. Presently, the NPCI central mapper has about 160 million Aadhaar to bankgebouw mappings ter its database. Spil part of large scale adoption of Meteen Benefits Transfer (DBT) across all subsidy systems, it is expected that mapping database will have about 200-250 million Aadhaar mappings within next 12-18 months.

Payment Support Providers (PSPs), spil defined by RBI, collectively voorkant all RBI-regulated entities under the Payments and Settlement Act of 2007. Thesis include banks, payments banks, PPIs, and other regulated entities. Ter addition to the Aadhaar and the mobile number spil global identifiers (mapped by NPCI), PSPs can opoffering any number of virtual addresses to customers so that they can use the virtual address for making and receiving payments.

Instantaneous Payment Service (IMPS), launched on 22 November 2010, is now available to the Indian public from overheen 65 banks.

Unstructured Supplementary Services Gegevens

National Payment Corporation of India

The Unique Identification Authority of India (UIDAI) which issues digital identity (called Aadhaar number) to residents of India and offers online authentication service.

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