How Does It Work?

Consumer Voice - - Uni Ed Payments Inter Ace (upi) -

UPI merges mul­ti­ple bank ac­counts into a sin­gle mo­bile ap­pli­ca­tion (of any par­tic­i­pat­ing bank) and al­lows seam­less fund rout­ing and mer­chant pay­ments. The UPI mo­bile ap­pli­ca­tion al­lows a user to send money to any bank ac­count through their mo­bile phone, with­out hav­ing to en­ter debit/credit card de­tails, with­out net-bank­ing/wal­let pass­word, or even with­out know­ing the re­cip­i­ent’s bank ac­count num­ber. Thus, it can serve as an en­abler to ex­ist­ing wal­lets and can be used to fund the wal­lets.

Built on the ex­ist­ing IMPS sys­tem, UPI ba­si­cally makes trans­ac­tions be­tween two vir­tual ad­dresses much sim­pler than what we have been used to so far.

Sup­pose you want to pay your driver Ram Chan­dra through your mo­bile phone. Un­til now, this would have meant send­ing the amount through NEFT to Ram Chan­dra, Ac­count No. 12345678, with XYZ bank, Delhi branch, with IFSC code: ABC00999.

The UPI has sim­pli­fied the process. It plays the role of a cen­tral registry and al­lows com­pli­cated ac­count in­for­ma­tion to be con­verted into a sim­ple ad­dress. In the above ex­am­ple, if you and your driver have their re­spec­tive vir­tual ad­dress un­der the UPI, the user would make the pay­ment from ‘user@ xyzbank’ to ‘ram­chan­dra@xyzbank’.

The cen­tral registry sys­tem con­verts vir­tual ad­dresses into the in­for­ma­tion needed to make a trans­fer. This sim­pli­fi­ca­tion means al­most any­body will be able to pro­vide their bank ac­count in­for­ma­tion in an un­der­stand­able man­ner, and have one ID/ad­dress where the money can be sent from and re­ceived.

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