What is UPI (Unified Payments Interface) & how does it work?

UPI or Unified Payments Interface is a payment system in India that has significantly improved the way transactions are carried out. Introduced by the National Payments Corporation of India (NPCI) in 2016, UPI enables instant, real-time payments between banks.

What is UPI

UPI is a real-time payment system that facilitates inter-bank transactions through a single mobile application. It integrates multiple bank accounts into a single platform, allowing users to send and receive money, pay bills, and make online purchases with ease.

Features of UPI

• Unified platform: UPI integrates multiple bank accounts into one app, enabling seamless access to all your finances. With just one app, you can send and receive money, manage accounts, and perform various banking tasks effortlessly.
• Security assurance: Each UPI transaction is protected by a secure PIN and processed through NPCI's secure network, ensuring your data remains safe from unauthorised access.
• End-to-end encryption: UPI transactions are encrypted from start to finish, guaranteeing that your information is secure and cannot be intercepted by third parties.
• 24/7 accessibility: UPI is available anytime, anywhere, allowing you to transact without being bound by banking hours. Whether it's day or night, UPI is always at your service.
• Convenience: With UPI, there's no need to remember long account numbers or IFSC codes. A simple virtual payment address (VPA) makes transactions quick and hassle-free.
• Instantaneous transactions: UPI processes payments in real-time, ensuring that money is transferred instantly. This is particularly useful for urgent payments, such as online shopping or bill payments.
• Trackable transactions: UPI provides detailed records of all your payments, making it easy to track spending and manage your finances effectively.

How does UPI work?

1. Initiate a transaction: Open your UPI app and select the 'send money' or 'pay' option.

2. Scan their UPI QR code: If you’re making a payment at a store, scan the UPI QR code provided by the merchant.

3. Enter the transaction amount: Type in the amount you wish to transfer or pay.

4. Authenticate the transaction: Enter your UPI PIN to authenticate the transaction.

5. Complete the transaction: Once the UPI PIN is verified, the transaction is processed instantly, and you’ll receive a confirmation message.

What is the UPI transaction limit?

NPCI has set specific limits for UPI transactions, which are subject to change based on regulatory guidelines and individual bank policies.

1. Per transaction limit: The standard per transaction limit for UPI is ₹1 lakh. However, for payments made to educational institutions and healthcare providers, this limit is extended to ₹5 lakh per transaction.

2. Daily transaction limit: The NPCI's general guideline is ₹1 lakh per day. However, depending on the bank, the daily UPI transaction limit can range from ₹25,000 to ₹1 lakh.

Also Read: Top 6 UPI safety tips to secure transactions

Conclusion

UPI has transformed the way India handles digital payments, providing a secure, convenient, and efficient method for everything from sending money to friends to paying bills and shopping online. With its intuitive features and strong security, UPI makes managing your finances easier than ever.

To manage your finances efficiently, download the Axis Bank’s Mobile Banking app, open – an easy-to-use tool for sending and receiving payments instantly and securely.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.