Payment Option

Payment Option.


Innovation: The idea here was to come up with a solution so that innovations on both payee and payer side can evolve without having to change the whole interface. It should allow application providers to take advantage of enhancements in mobile devices, provide integrated payments on new consumer devices provide innovative user interface features, take advantage of newer authentication services, etc. UPI is build over IMPS, leveraging the present robust technology.


Adoption: Given the size of the potential user base, the key was to have a solution which should not crash and be scalable to a billion users and enable large scale adoption. It should allow gradual adoption across smartphone and feature phone users and provide full interoperability across all payment players, phones, and use cases. People using smartphone should be able to send money to others who are not yet using any mobile application and vice versa. Similarly, it should allow full interoperability between multiple identifiers such as Aadhaar number, mobile number, and new virtual payment addresses.

Security: One of the key areas of concern among users is security. The solution had to provide end-to-end strong security and data protection. The trick here was not to reveal too much data like banking or other personal details which could be misused. You just need a Virtual Payments Address to do a payment. For convenience, the solution also had to offer 1-click 2-factor authentication, protection from phishing, risk scoring, etc.

Cost: India is a cost-conscious country and any product with a high cost is likely to have a short life. Since mobile phone number is used as an authentication (credential capture) device, use of virtual payment addresses, and use of third party portable authentication schemes such as Aadhaarshould allow both acquiring side and issuing side cost to be driven down.



The new way of money transfer, The UPI has many benefits over the existing payment methods. Because of its obvious benefits, the experts consider it a revolutionary innovation. In RBI governor Raghuram Rajan’s word, The UPI is whatsapp moment for banking. UPI is one of the most advanced method among all the digital payments.

The UPI is a payment mechanism which allows instant money transfer without the bank details. Instead of bank account number and IFSC code, the virtual payment address is used to pay through the UPI.  Let us explore the benefits of UPI.

1. Cheapest Way of Money Transfer

The UPI is the cheapest method of fund transfer. The NEFT charges minimum Rs 2.5 for a transfer, the IMPS charges minimum Rs 2.5. But the UPI charges too less to believe. It costs less than 50 paise for a transaction through the UPI.

Becuase of this low cost, the UPI has the potential to promote the non cash transactions of small amounts.

2. It Makes you Free from Cash

There are many ways of transactions which has decreased the cash transactions. The card payment, net banking and mobile wallets are widely used. However, we rarely use the card or netbanking for  small transactions such as payment to your neighborhood grocery or payment to a vegetable vendor. In fact, it is not feasible for the consumer as well as the shopkeeper.

But, the UPI makes small transactions feasible. The smooth and low cost transaction had made it feasible for small shopkeeper and consumer as well. Once, you start using the UPI, you need less visits to the ATM.

3. No Need to Give Details

Most of us avoid using online transaction and card payment because it ask for the bank account details. For card transaction, you give card number, validity period and CVV number. Whereas net banking transaction expose your bank account details. For this reason, the card and online payment is not as much popular. People still prefer cash.

But the UPI solves this problem. The payment through the UPI does not require the card details or bank account details. You have to only give the virtual payment address. the virtual payment address is similar to our email ID. e. g [email protected], [email protected] It is easy to remember this ID.

4. More Secure

Not everyone uses the card for payment. Not everyone uses the netbanking for the online payment. People are reluctant to use the non cash methods because of the security concern.

What if someone overlooks your PIN while you punch it at the POS terminal. What if the website steal your credit card data and use it for the international transaction.

The UPI has minimized this concern. Actually It is more secure than the present mode of transaction. In the transaction through the UPI, you never share you bank account details. You do not enter your credit card number or CVV. You only give a virtual payment address which does not give any clue about your bank account.

Also the authentication takes place at your smartphone. It is done by punching the two different PINs. You can easily make it discrete while typing at your smartphone.

5. Instant Transfer

The UPI is based on IMPS platform. Thus It works 24 x7. You can make payment any time. There is no restriction of holiday or odd hours. The bank strike will also not affect the UPI payments.

6. One UPI App Many Accounts

After the UPI mobile app, you do not need multiple apps for multiple bank account. A single UPI would serve for many bank accounts. You can link many bank accounts in a UPI based app.

Because of the multiple accounts at one place, you can pay by using any of the account. You can also set the default account for the payment.

5. Choose Any UPI App

You also get liberty to choose any UPI based app from the google play store. It is not mandatory to use the App promoted by your bank. Your bank account may be with the ICICI Bank, but you can use the UPI app of the axis bank.

Before using an app, check carefully the interface and ease. Also, use those app which gives you desired Virtual payment address.

Note, with the change of App you have to get a new VPA, thus it is not advisable to change it frequently.

6. Immediate Registration of Payee

The registration of new payee for the online fund transfer takes some time. This time varies form half an hour to 24 hours. However, the UPI doesn’t have such waiting period. You can instantly transfer fund to a new payee.

7. Money Collection Facility

If you  have given a service or product to someone and want the payment, what would be way to ask for the money? You will send a person or make a call.

You would agree that getting money from a party is always tough. There can be numerous excuses. But, the UPI would give more power in the hands of biller and It would not be easy for the client to give excuses.

The money collection facility of the UPI sends a message directly to the party. This message is sent via the bank. It only asks approval for the payment. If the client approves, the money would be remitted instantly.  If the client does not approve, it means he/she does not want to pay. Now the biller can deal it differently.

11. UPI would Replace Many Digital Wallets

Digital wallet has eased the online payments. The mobile recharge, rail tickets, online shopping has become very smooth because of the digital wallets. But the number of such wallets are increasing. Paytm, Freecharge, Flipkart and IRCTC, Everyone want you to keep the digital wallet. So it become hassle to maintain more than one wallet.

The UPI would end this hassle as well. The payment through the UPI is as easy as payment through the wallets. But a single app is enough to pay anywhere. Also, the UPI does not ask money in advance. Rather, your money remains in the bank account and keeps earning the interest. Digital wallets don’t give any interest.