How to start using UPI for digital payments?

I am thrilled. I received my first fee payment via UPI.

Why am I telling you this?

Let me share the backdrop.

You now know that the Government of India is making a big push towards a Digital Economy. The old Rs. 500 and Rs. 1000 notes have been declared illegal effective Nov 9, 2016. The new notes of Rs. 500 and Rs. 2,000 will be issued over time, in limited quantities.

The biggest contributor of this Digital movement will be the money moving up there. Once money starts moving digitally, will the dream of a Digital India (@_DigitalIndia) be truly realised.

UPI is an important initiative in this direction to make money go digital. It is the way we will make payments and receive money in the future.

It’s time that we get ourselves familiar and start latching to the medium.

Here’s a scenario.

I go to my grocer and buy items such as pulses, milk and a few chocolates. The total amounts to Rs. 195. I ask the grocer his UPI virtual ID.

I open my bank UPI enabled app, type in the virtual ID of the merchant, enter the amount, my M-PIN and confirm the transaction. In a few seconds, the amount is credited to the bank account of the merchant. Whoa!

The same can be true for your chemist, doctor, personal staff such as maids, drivers, etc. Even the weekly bill of the Chaiwala or the stationery supplier outside your office can be settled this way.

No cash involved.

Oh yes, almost everyone has a smartphone and a bank account today and you can get them a little upto speed on using this facility.

Now, let’s get you started with UPI, in case you haven’t yet.

How do I start using UPI?

It is fairly simple.

If you have a bank account, then download the UPI app of your bank from Playstore. In several cases, the UPI option is available within the mobile app of the bank. Currently, 27 banks are offering UPI services and the number is expected to increase.

The best part about using UPI is that you have to enter only the virtual ID of the person you want to transfer the money to. There is absolutely no need to enter any Debit Card details, bank details, CVVs, etc.

How do I create the virtual ID?

You create a one time virtual ID against your bank account by providing your Name, Account Number, IFSC Code, etc.

For example, one of my virtual IDs is vipin.khandelwal@hdfcbank. I need to provide only this ID to anyone who is planning to transfer money to my bank account.

I can also use two virtual IDs to transfer money from one of my bank accounts to another. For example, for HDFC Bank to ICICI Bank, instantly.

At what times of the day can I use this facility to transfer or receive money?

You can do immediate transfers, 24*7, 365 days. The need to carry cash in the wallet should become literally zero.

Are there any money transfer limits?

As of now, you can transfer payments upto Rs. 1 lac per transaction. For small payments, this is a sizeable amount.

Is there any fees applicable on these digital money transfers?

Currently, there are no fees. However, when it is introduced, it is hopefully going to be insignificant.

Are payments done via UPI secured?

The system, as you notice, reveals very few details to anyone, except the virtual ID. There is also 1 click 2 Factor authentication, using the combination of your virtual ID and M-PIN, applied to all transfers.

Do all banks support this?

As of now, 27 banks have started offering UPI enabled apps. More will join. You can see the current list of banks here.

Will it work on all phones and operating systems?

Currently, it is available only for Android systems and can be downloaded from Google Play Store. Go to the Google Play Store and search for your bank’s UPI app and download it.

The iOS versions are expected to arrive in a few months.

Update: Banks such as ICICI already have an iOS version.

Does this work for credit cards also?

No, this is only a bank account to bank account transfer facility.

FYI, UPI stands for United Payment Interface, a mobile to mobile digital instant money transfer service built by National Payments Corporation of India (NPCI). It is the same agency that provides the necessary infrastructure for payments in India including the issue of the Rupay card.

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Between you and me: So, my client and I had the first experience of using UPI and we both were thrilled. I am now going to make this the primary digital payment channel.

There are several digital wallets out there such as PayTM which also enable digital transfers. In case you are not, you will have to soon become comfortable with these.

Are you ready to get started now?