Understanding UPI Payments

Recently Our Indian government taken major steps to enhance the use of cashless transactions. These cashless payments are done through various cards(Debit card or Credit card) provided by bank ,there is an another option for cashless payments which is through UPI-Unified Payment Interface. This payment model allows us to use our smartphones as Virtual Debit card.

UPI-It is a single platform that merges various banking services and features under one umbrella. Bank-to-Bank payments can be easily made using a mobile number or virtual payment address (UPI ID).UPI is an initiative taken by the National Payments Corporation of India (NPCI) together with the Reserve Bank of India and Indian Banks Association (IBA). NPCI is the firm that handles RuPaay payments infrastructure, i.e. similar to Visa and MasterCard. It allows different banks to interconnect and transfer funds.

UPI-PIN-It is a 4-digit personal identification number that must be entered to authorize the transfer of money via UPI. The PIN can be chosen by the account holder.

How it works?

Before 4–5 years for sending money to any person we should know the receiver's account number ,IFSC code, account type, bank name. But Now we can send money by just knowing receiver's mobile number linked to bank account.

Architecture :-

1. Push and Pull Payments Virtual Address (‘Username@PSPName’) Transfer using Single identifier like Aadhaar No Banks — (Payment Service Provider) will provide App to customers of any bank One App for all transaction needs Single Click 2FA Unified Payments Interface
2. Participants PAYMENT SERVICE PROVIDER (PSP) • PSPs will be banks who will provide Apps BANKS • Merchant or customer’s bank (account relationship) • NPCI provides UPI interface.
3. Benefits to Banks Simple (Single click 2FA) Universal App for transactions Leverages existing Infrastructure Secure Payments basis Single/Unique Identifier Tap C2B segment & E-Com / M-Com
4. Benefits to Merchants Seamless fund collection from customers — single identifiers No risk of storing customer’s virtual address like in Cards Tap customers not having credit/debit cards Suitable for e-Com & m- Com/ Resolves the COD collection problem Single click 2FA facility to the customer — seamless Pull In-App Payments (IAP)
5. Benefits to End Users Privacy Share only Virtual Address and no other sensitive information Multiple Utility Cash on delivery/bill split sharing/ merchant payments / remittances One Click 2 FA Authorise transaction by entering only the PIN (Biometric to Follow) Work across various interfaces Payment request generated on Web interface; authorized on Mobile interface (App) Payment through Aadhaar Number Pay using the Aadhaar number Availability & Security Available 24*&*365. Customer does the transaction on his personal device
6. Transaction Types Financial Transactions • Pay Request • Collect Request Non-Financial Transactions • Mobile Banking Registration* • Generate One Time Password ( OTP) • Set / Change PIN • Check Transaction Status * For mobile numbers already registered with the bank for SMS alerts
7. Authentication Authentication First Txn Authorised by Subsequent Txn Authorised by 1st Factor Mobile Number (OTP) Issuer Device Finger print PSP 2nd Factor PIN or Biometrics Issuer PIN or Biometrics Issuer Single Click 2FA
8. Simple enabling Steps Step 1 • Download PSP App and create Profile Step 2 • Add Bank Account/s Step 3 • Register for Mobile banking, if not already registered / Generate PIN for Transactions
9. Use Cases
10. Use Case 1 :- Collect Taxi Fare — (Proximity PULL) TAXI PSP APP xxx@yybank Submit 1 • Customers virtual address • A/C details of taxi driver 2 • Identifies Customer’s PSP yybank and routes to yybankPayee ( Merchant’s) PSP 5 • PSP validates the customer details. • Send the financial details to UPI for debit to customer account. Customer’s PSP 4 • MPIN entered by Customer9 • Successful credit 8 • Credit Request PSP APP MPIN Submit 3 • Sends notification for payment 10 Txn Confirmation 6 Debit Request 7 • Successful Debit basis MPIN Customer’s Bank Taxi Driver’s Bank Taxi Driver PSP 11 Response to Payee UPI
11. Use Case 2 :- Remittance — (Remote PUSH) 13 PSP APP Enter MPIN Submit 1 • Captures Receiver Virtual address. • Sender enters Issuing Bank MPIN and amount 2 • Sender Customer’s A/C details & MPIN • Beneficiary’s Virtual Add 3 • Identifies Beneficiary’s Handle. Sends to Beneficiary Customer PSP Beneficiary Customer’s PSP4 • Beneficiary PSP responds with financial address of Beneficiary Customer Sender Customer’s Bank 5 • Sender Customer’s A/C details & MPIN • Debit Request 6 Successful Debit response 7 • Credit Request 9 Transaction Confirmation 8 Successful Credit Enter Beneficiary’s Details (V.A) Validates the TXN using Device finger print — Device ID/App ID, Mobile Number 10 TXN response Sender PSP Beneficiary Customer’s Bank UPI.

Benefits of Using UPI-

1.Pay for your hailing services, food delivery services, and shopping sites with UPI payments for instant fund transfer.

2.Pay at the nearest restaurants, grocery stores, and departmental stores online.

3.Rent, mobile recharge, and utility bill payments can be done online instantly.