What is UPI?

We resist change, especially change that we cannot understand or approve of. Technological advancements in every field have compelled us to follow new methods we need to quickly adapt to, whether or not we like it.The banking sector is also not far behind in its advancements; making it more and more convenient for us to perform bank transactions. One such improvement is UPI; that is, Unified Payments Interface. We have heard this term often, but we do not completely understand what it is and how it works, and, like all things, we will be more comfortable with change when we can comprehend it. Unified Payments Interface (UPI) is a payment system developed by the National Payments Corporation of India (NPCI) that allows you to instantly transfer money between any two bank accounts. UPI is built over the IMPS infrastructure which means it is 24/7 and instant. National Payments Corporation of India (NPCI) is a non-profit organisation backed by Reserve Bank of India (RBI) and Indian Banks Association (IBA). It operates retail payments and settlements payments in India. It allows a user to send or receive money on their smartphones using Aadhar number, mobile number, and virtual payments address, without any need to fill bank account details.To make a transaction, you have global address and local address. Your global address is your mobile number and Aadhar while the virtual address can be a local address.Your virtual address is like an email address, it will look something like xyz@hdfc, xyz being your username and HDFC being your bank for UPI. Virtual IDs are great alternatives to having to share your bank account number. You can even create one time virtual IDs to make it more secure (like with Bitcoin transactions).The UPI uses a 2FA, that is 2 Factor Authentication as mandated by RBI. 2FA is used for example when you withdraw money from an ATM. You use the ATM card as first authentication and the ATM PIN as the second.Banks give you MPIN while the NCPI App BHIM has UPI-PIN. These pins are used in place of OTP and are similar to the function of an ATM PIN. UPI-PIN is a 4-6 digit passcode that is generated when you register with BHIM App for the first time. You can use this code to authorize UPI transactions.MPIN, on the other hand, is provided by banks to its mobile service users for UPI and mobile banking support.You can use either based on which medium you choose to use for UPI. BHIM (Bharat Interface for Money) allows you to send or receive money from and to UPI payment addresses, or to non-UPI based accounts.BHIM is not a money wallet; it is just used as a medium to transfer money between bank accounts. It also allows you to check bank balances of your various bank accounts.You can download it from the Google Play Store or the App store. IMPS requires you to enter the recipients bank account number and IFSC. UPI eliminates the complicated typing of long number over your phone. You just need your recipients contact number that they have registered with their bank account.As for similarities, both are instant and the secure. For now, the upper limit is Rs 1 lakh.