Unified Payments Interface (UPI)

Subject – Economy

Context – India, Singapore to link fast payment systems

Concept –

The Reserve Bank of India (RBI) and the Monetary Authority of Singapore (MAS) on Tuesday announced a project to link their respective fast payment systems — Unified Payments Interface (UPI) and PayNow — to facilitate instant, low-cost, cross-border fund transfers. The linkage is targeted to be operationalised by July 2022.
UPI is India’s mobile-based, ‘fast-payment’ system that facilitates customers to make round-the-clock payments instantly using a virtual payment address created by the customer.
PayNow is the fast payment system of Singapore that enables peer-to-peer fund-transfer service.

About UPI –

UPI is a real-time payment system that helps in instant and quick transfer of funds between two bank accounts.
The transfer of funds is done through a single mobile application.
Some of its important features are –
- Immediate fund transfer which is faster than NEFT.
- UPI is available for 24 hours
- It is also available on public holidays
- Every Bank provides its own UPI for different mobile platforms like Android, IOS.
- It can be utilized for making payments to merchants, and utility bill payments.
- Any complaint can be raised from Mobile App directly.
UPI is currently the biggest among the NPCI operated systems including National Automated Clearing House (NACH), Immediate Payment Service (IMPS), Aadhaar enabled Payment System (AePS), Bharat Bill Payment System (BBPS), RuPay etc.
The idea of UPI was developed by the National Payments Corporation of India (NPCI) and is controlled by the Reserve Bank of India (RBI) and IBA (Indian Bank Association).
The UPI interface is based on the authentication of 2 factors. This is in line with the regulatory guidelines making it very safe.

Are BHIM and UPI the same?

UPI is a platform whereas BHIM is a separate mobile wallet app like Paytm, PhonePe, etc.
If a person has bank accounts with the different banks then the person will have to use different UPI apps and VPA (Virtual Payment Address). On the other hand, BHIM is a unified payment app based on UPI which can be synced to any of the UPI enabled bank accounts.
The BHIM app is an upgraded version of existing bank UPI apps.
The biggest advantage of BHIM apps over other payment apps is that transactions happen directly between bank accounts and no charges associated with the transfer.
Unlike other payment apps, there is no need to recharge BHIM payment apps. There are no commission or hidden charges.

To know more about BHIM app, please click here.

National Payments Corporation of India

National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.
It is a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.