Unified Payments Interface (UPI) is a real-time payment system that was introduced by the National Payments Corporation of India (NPCI) in 2016. It is a revolutionary system that has completely changed the way people in India transact money. With UPI, one can send and receive money instantly, without the need for any bank account details, IFSC code, or other traditional banking information.
UPI works on the principle of a virtual payment address (VPA), which is a unique identifier for each user, similar to an email ID. Users can link their bank accounts to their UPI IDs and make transactions seamlessly. One can easily create a VPA through a UPI-enabled mobile application of their respective bank or any third-party UPI app.
UPI transactions are secure and encrypted end-to-end, with multi-factor authentication protocols in place. This ensures that the transactions are safe and protected against any fraudulent activities. Moreover, UPI is a cost-effective option as there are no transaction charges for money transfers.
UPI has made digital payments accessible to everyone, including people from remote areas who might not have access to traditional banking facilities. The system has helped to reduce cash transactions and the need to carry physical money. The UPI system has become so popular that it has surpassed traditional payment methods like credit and debit cards in terms of the number of transactions.
To use UPI, a person needs to have a smartphone and a bank account. The bank account must be linked to the UPI ID to send or receive money. Transactions can be made 24x7, including weekends and public holidays.
In conclusion, UPI has revolutionized the digital payments landscape in India. It has made transactions faster, easier, and more convenient for everyone. With the increasing adoption of smartphones and digital technologies in India, UPI is likely to continue its growth trajectory and become the primary mode of payment for most people.
The National Payments Corporation of India (NPCI) has notified that an interchange fee of up to 1.1 per cent will be applicable on merchant UPI (Unified Payments Interface) transactions from April 1.
In a recent circular, the NPCI said that using Prepaid Payment Instruments (PPIs) for transactions through UPI will attract an interchange fee. The charges will be levied if the transaction is more than ₹ 2,000.
The interchange fee varies for the different categories of merchants. It ranges from 0.5% to 1.1% and a cap is also applicable in certain categories.
In a notification issued today, NPCI said that the introduced fee is only applicable for merchant transactions made through prepaid payment instruments. The payments body clarified that no charges will be levied on normal UPI payments which it termed as "bank account- to-bank account based UPI payments."
For telecom, education, and utilities/post office, the interchange fee is 0.7% while for supermarkets the fee is 0.9% of the transaction value. 1% charges will be levied for insurance, government, mutual funds, and railways, 0.5% for fuel, and 0.7 for agriculture, reported CNBC TV-18.
The charges will be applicable from April 1.