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Unified Payment Interface Definition

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Last editedNov 20212 min read

It’s now easier than ever to send payments with a swipe of your smartphone, and one of the applications enabling peer-to-peer transfers is the Unified Payments Interface (UPI) technology. So, what is Unified Payment Interface exactly, and how does it work? Here’s how to get started.

What is Unified Payment Interface?

A Unified Payments Interface (UPI) is a mobile banking system used primarily within India, but it can also be used to send and receive money internationally provided both users are set up with an India-based UPI account. Essentially, the interface allows users to transfer money between two bank accounts via smartphone app. Originally developed by the National Payments Corporation of India (NPCI), UPI streamlines mobile payments for greater efficiency. There’s no need to enter your bank details or other details each time you want to send a UPI payment.

When you set up a UPI account, you’ll be able to send payments in real time with two-click factor authentication. The Reserve Bank of India (RBI) monitors and regulates the Unified Payment Interface for added security.

How does UPI work?

The Unified Payment Interface works by issuing unique QR codes for many transactions, which makes it suitable for both online and brick-and-mortar stores.

Static QR codes are used in physical locations. To make a payment at a special event or shop counter, you simply pull out your phone and scan them to transfer the money. The merchant’s bank account information is linked to the QR code, which ensures a seamless real-time UPI payment.
Dynamic QR codes offer another option for businesses who wish to deliver groceries or online shopping, for example. These generate a unique QR code each time a payment is made, enabling fast and cashless UPI payments.

You can also send payments to friends and family by using a virtual identifying address, similar to an email. Users can type in the amount they wish to send and the address, with no QR codes needed.

How to set up your UPI account

To get started with using the interface, you must set up your UPI account. You’ll need an account at a UPI-member bank, as well as a smartphone. Most banks in India are members, so if you have an existing Indian bank account it’s most likely eligible.

Register your mobile number with your bank to link your UPI account with your smartphone.
Download the UPI supporting app. Popular examples include digital wallets and apps like Paytm, Google Pay, PhonePe, and MobiKwik.
Create your unique ID to send and receive UPI payments within the app. Your bank will ask for verification via a one-time password or notification.
Set up your virtual payment address (VPA). A VPA is your unique verifying address, similar to an email address attached to your bank. By using the VPA, you can avoid typing in bank account details each time you send or receive money.

Are UPI payments secure?

There are multiple security features built into the UPI system. This begins right when you initially register your smartphone in the system, connecting your UPI account and mobile number. If you change phone numbers, you’ll need to verify your account again. You’ll also be able to block your mobile number if your phone gets lost or stolen.

During transactions, you control the level of security by choosing a 4 or 6-digit mobile PIN number (MPIN). If you wish to have this added security layer, you can use the MPIN to verify every transaction. This means that even if someone else has your phone and app, they won’t be able to use it to make payments.

Finally, the nature of the unique QR codes for each merchant means that the system is able to verify the validity of each transaction from both ends. You won’t be able to make payments to merchants who aren’t UPI-certified.

Safe, effective, and efficient, UPI payments offer a simple way to pay for everyday goods and services within India.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.