The Unified Payments Interface (UPI) was officially launched in April this year, and the National Payments Corporation of India (NPCI) announced on Thursday that the bank applications for the UPI have officially launched. This means the UPI is now live, and connected to 21 banks.
The way the UPI works is simple - it is a platform through which you can transfer money between bank accounts. It's based on the IMPS platform that you might already be using for transferring money, but you don't need to add a recipient in advance, and you don't need to enter their account number or IFSC code to send the money either.
In short, you can now use net-banking just as easily as you would use a mobile wallet - all you need to send money to someone is their UPI ID, which could be as simple as gopal@icici (just as an example), or 1234567890@axis (just replace 1234567890 with your phone number here). The UPI actually has a broader scope than just this - it's looking at using Aadhar-enabled biometric authentication for payments, for example, so you could replace a debit card with your thumbprint. There are a lot of other ways in which it could be used, and while most people have been comparing it to mobile wallets, it could actually be a tool for wallets to offer new services.
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As noted by the NPCI release, the UPI has been in pilot testing since the soft launch in April, and was found to work smoothly for pay and collect services, which means it could be used by merchants as a settlement tool.
"This is a success of enormous significance," said A P Hota, MD and CEO, NPCI. "Real-time sending and receiving money through a mobile application at such a scale on interoperable basis had not been attempted anywhere else in the world. Now the UPI App will be made available on Google Play Store by banks.”
The UPI app will presently go live only for banks with over 1,000 test customers, 5,000 transactions, and a success rate of over 80 percent. The banks whose apps will be releasing in the next two to three days, according to the NPCI, are Andhra Bank, Axis Bank, Bank of Maharashtra, Bhartiya Mahila Bank, Canara Bank, Catholic Syrian Bank, DCB Bank, Federal Bank, ICICI Bank, TJSB Sahakari Bank, Oriental Bank of Commerce, Karnataka Bank, UCO Bank, Union Bank of India, United Bank of India, Punjab National Bank, South Indian Bank, Vijaya Bank and YES Bank.
"Such a threshold criteria helped banks to refine their systems and procedure," Hota said.
Since the UPI includes pay and collect, it can be used to send bills by merchants, or to send money to a friend, in all the ways we've grown accustomed to using a mobile wallet, but with access to your bank account - effectively solving the question of having silos of money you need to keep refilling. In many ways, the UPI could be a real enabler for e-commerce, as anyone with a smartphone and an Internet connection effectively gets a secure payment channel that's still easier to use than any other systems for online payments.