Seriously, what is this UPI thing?
UPI is a payment system that allows you to transfer money between any two parties.
So it’s like NEFT/RTGS/IMPS?
Kinda, except it’s far more well defined and standardized across banks, which means you can initiate a bank account transfer from anywhere with a few clicks.
That’s cool but how does it affect me?
UPI allows you to pay directly from your bank account to different merchants without the hassle of typing your card details, or netbanking/wallet password.
Does it skip the OTP prompt I get?
No, the 2FA is mandated by RBI, and is part of UPI. However, it uses MPIN as the 2FA instead of a One Time Password.
I have never heard of an MPIN.
An MPIN is given to a banking customer once they register for Mobile Banking support. Chances are you have one already, but have never used it.
How is it better than just using my Card?
Cards are a hassle to type on phones, and transmitting card data brings its own security problems. UPI bypasses all of these.
But won’t the merchant get my Bank Account Details?
UPI brings this awesome idea of “Virtual Payment Address” (Which look something like ‘razorpay@hdfc’).
You only give your merchant this address, and they can store your payment details against this. They never even get to see your bank account number.
What if I switch banks?
Different banks will have different protocols for giving out these addresses, but they are considered to be revocable.
So, theoretically, you can even generate one-time virtual payment addresses (similar to bitcoin) if your payment service provider permits.
What is a Payment Service Provider?
Quite attentive you are! Currently, UPI permits all banks to be registered as Payment Service Providers (Which means they can run bank accounts), but this scope can get wider and perhaps even include wallets.
How does this affect wallets?
For now, wallets are not included in UPI at all. Which means it is just a cross-bank transfer medium.
Hopefully, a lot of merchants will start accepting payments using UPI instead of plethora of wallets we currently have.
Makes sense to use your bank account directly for payments, doesn’t it?
How does it show up in my bank account statement?
It will show up as an IMPS Bank transfer to the merchant bank account.
What about refunds?
Refunds are currently not part of UPI and the authority for all arbitrations lies with NPCI.
Another abbreviation? What is NPCI?
Thought you’d never ask. NPCI is the National Payments Corporation of India.
They run a lot of the payments infrastructure in India, including issuing RuPay Cards and making sure you can withdraw money from any ATM irrespective of the bank.
OK, I’m hooked. How do I use this?
UPI is now publicly available. Check if your bank has released an updated mobile app with UPI support already.
Source :- Razorpay.com