UPI was ahead of net banking and other card-based payments by a margin during 2020, and Indian consumers are steadily moving towards adopting it.

September 2021 saw a record ₹6.54 crore worth of transactions via the UPI medium. A steep 2x jump was observed compared to the numbers for the same period in 2020. Even the number of banks that support UPI rose by 50%, from 174 to 259.

What is UPI?

A report released by Macquarie stated that UPI payments formed 10% of all retail payments made in the first four months of 2021. The growth is phenomenal, considering its share was limited to only 2% a few years ago.

In 2016, the National Payments Corporation of India (NPCI) collaborated with the RBI (central bank of India) and the IBA (Indian Banks Association) to develop a modern payment solution that would enable banks to transfer funds for individual account holders seamlessly. The collaboration resulted in the development of the UPI platform.

The unified payment interface or UPI is a banking interface that allows users to transfer money between bank accounts via a single window. It is an advanced version of IMPS and NEFT and looks to eliminate the need for the users to enter their credentials every time before making a transaction.

Features of UPI Payments

UPI looks to eliminate the clutter around digital payments. Here are the key features of UPI payments: 

Reliable

A significant chunk of our digital payments would fail or take longer than expected to process a few years back. It left us fuming, and we were looking for an innovative solution. With the advent of UPI, reliability became one of the most prominent features of digital payments. It brought about greater control for the users and eliminated the need to maintain multiple third-party apps for different purposes. 

Real-time Transactions

NEFTs in the old days would take some hours to transfer funds across bank accounts, and that was the fastest during its time. With UPI, transfers take place in real-time. All the customer needs to do is click on the pay button, verify their credentials, and complete the payment within seconds. It has allowed customers to use digital payments for various daily tasks, such as buying medicines, vegetables, paying for their Uber drive, and more. 

No Floor Limit on Transactions

How would we like our digital bank payments to be? We would like to see something that could process any amount required (subject to an upper limit for security purposes). That is what UPI does. It allows users to transfer as low as INR 1 with ease. Find out more about the UPI transaction limit here.

No Transaction Charges

RTGS and NEFT were criticized because they had charges attached to them. With UPI, you can send any amount you wish without having to pay a single penny. It allows for a clutter-free and convenient experience for the users. 

Inclusive

Do you have only an app that supports UPI? Great, it works. Are you suffering from a lack of internet connectivity and still wish to make UPI payments? Thankfully, that is possible too. All you need to do is send a specific message enabling the bank to carry out the transaction on your behalf. It has allowed people living in areas with limited connectivity to adopt digital payments seamlessly. 

Check this blog to find out how to create UPI Id.

How Does UPI ID Work?

If you want to carry out a UPI transaction, you will need a VPA or virtual payment address (for example – Joedempo@oksbi). You can link multiple bank accounts to the same VPA for carrying out UPI transactions. But how does it work? Well, various entities come together to ensure a successful transfer of funds. 

Here are the entities involved in carrying out a successful UPI transaction: 

Payment Service Provider (PSP)

Apps like BHIM and others are available at the consumer’s end to initiate and complete a UPI transaction. NPCI issues certificates to specific apps allowing them to carry on UPI-based transactions and issuing UPI handles. At present, there are over 20 third-party apps that can undertake UPI transactions. 

NPCI

NPCI is funded by a plethora of banks across the country and is a non-profit organization. RBI formulated it to facilitate data flow between banks and ensure that the payment is routed via the allowed mediums. The user can register for all these apps and create a different UPI ID to help users in solving their issues with UPI payments. 

Sender’s Bank

The next party involved in a UPI transaction is the sender’s bank or the issuing bank. These bodies receive a request from NPCI to debit money from the sender’s account. Once the debit is complete, the sender’s bank intimates that the transaction has been processed. 

Receiver’s Bank

The receiver bank or the acquiring bank is responsible for crediting the money in the receiver’s account of a UPI request. Once they credit the requisite account, they send an intimation to NPCI confirming the successful credit. 

Payee Payment Service Provider (Payee PSP)

Merchants use the payee payment service provider or payee PSP for P2M (payment to merchant) transactions. 

Partner with PayU India for effortless UPI transactions

The UPI is a robust payment infrastructure that has been instrumental in streamlining digital payments and making them accessible to all. Its working is simple and clutter-free, allowing it to be inclusive and play a significant role in the Indian government’s digital drive. 

But it is also imperative for businesses to partner with a capable UPI partner to make receipt and payment seamless via this medium. At PayU India, we understand the need for you to create a robust online presence. We allow a one-click, no coding, no developer, secure solution to seamlessly integrate with your existing payment infrastructure and undertake UPI transactions with ease. Click here to explore our services. 

The post What Is A UPI ID? How Does It Work? appeared first on PayU Blog.

Following demonetization and the ensuing problems with cash payments, the government made digital payments in India a priority. The Indian government has taken several steps to promote and support digital payments systems in India. The government has set a goal for the ‘Digital India’ initiative to establish a ‘digitally empowered’ ecosystem: ‘ Faceless, Paperless, Cashless.’ 

What are Digital Payments? 

Digital payments are transactions made via online modes without any physical exchange of money. This means that both parties, the payer and the payee, use electronic mediums to exchange money.  

The fast adoption of mobile devices and the rise of e-commerce are not the only factors driving digital payment rise. The following factors also have encouraged the expansion of these payment systems: 

• Traditional payment procedures are much more streamlined today. 
• More new entrants and competitors. 
• Expectations and Preferences of consumers are constantly evolving. 
• Rules, Regulations, and Legal frameworks. 
• Innovations that are both competitive as well as collaborative. 
• Newer payment methods have emerged as a result of technological advances and the adoption of existing ones. 

Why are Digital Payments Important? 

Establishing financial parity always remains critical in a nation like India, where inequalities are sometimes fundamentally opposed. One of the main reasons our government started talking more and more about Cashless Economy and Digital India was to make financial resources more accessible to every citizen possible. 

Depending on the platform you choose, digital payments are done by transferring money from the user’s account to your corporate bank account via the internet secure bank network. When you receive payment, the money is immediately sent to your corporate account. This makes the overall online payment procedure very simple and trustworthy. The following factors justify the increasing need for digital payments:

• Cash has become almost obsolete, mainly following the COVID-19 pandemic. Thus, sellers and buyers are looking for secure and convenient payment options. 
• Any company or individual from anywhere in the world can use digital payment methods. 
• You can make online payments more quickly than cash. 
• Compared to the traditional payment methods, digital payments are safer, simpler to process, and far less costly in the long term. 

What are the Different Methods of Digital Payments? 

Here are some of the most common digital payment technologies in India that might help you save time and manage your money transfers: 

Banking Cards

Banking cards, like debit and credit cards, are the earliest digital payment methods available in India. It had a significant impact on the payment system. This change was necessary for the long run to allow for a cashless or digital economy.

Mobile Banking

Mobile banking refers to the use of e-banking services such as  NEFT, RTGS, IMPS transactions to transmit money around the world utilizing your online banking platform. Most leading banks are working on interactive internet banking platforms to make online banking transactions increasingly common than they are now.

Mobile Wallets

A payment wallet comes with a lot of digital payments software. This wallet is a digital wallet that holds your money instead of your bank account in an incredibly simple interface, allowing users to conduct financial transactions straight from the application wallet.

Unified Payments Interface (UPI)

UPI is among the most widely used digital payment systems currently. Numerous simple and user-friendly smartphone applications enable users to transact directly from their bank account in seconds using the KYC verification completed during their account setup process.

Unstructured Supplementary Service Data (USSD)

USSD is a digitized form of payment that does not need the internet. It is the most convenient as you can do it by calling a standard code immediately from a genuine and validated phone network.

What are the Benefits of Digital Payments? 

Users, businesses, governments, and global development entities all benefit from digital payments. The following are some of the advantages of turning digital: 

• To promote financial inclusion, increase access to various financial services, such as savings, credit, and insurance. 
• Inclusive growth enables a more optimal income movement by allowing the economically disadvantaged to contribute to the economy. 
• Higher effectiveness and responsiveness result in cost savings. 
• Women’s economic engagement has gone north on the charts by giving them more control over their finances and additional options. 
• Safety and Transparency is much better these days as increasing and rapid tracking and accountability reduces fraud and theft. 

PayU As Your Digital Payments Partner 

PayU gives users simple, safe, and secure payment solutions with no need for coding and downtime. It even gives you access to digital payments application descriptions and also full-time integration support for the same. It enables users, individuals, freelancers, businesses as well as organizations to: 

• Create their online presence. 
• Accept online payments on the website, mobile app, and more. 
• Collect payments via professional invoices, blogs, web pages, QR codes, excel sheets, among others. 
• Pay their vendors, employees, and customers even on bank holidays with real-time updates. 

Conclusion 

The days of people relying on traditional payment methods like cash and cheques are pretty much gone. Computers and mobile phones have transformed the way we live and work and manage our finances and transactions. The emergence of modern services, such as e-commerce, has resulted in a desire for faster payment methods due to the constantly changing and expanding technologies. 

The post How Are Digital Payments Revolutionizing Money In India? appeared first on PayU Blog.

While the government is taking a lot of initiatives to encourage small businesses to use digital payment platforms, at PayU, we keep updating our products/features to ensure smooth online transactions for you and your customers. PayU payment gateway offers all payment options from NEFT (bank transfer), UPI, e-wallets, and others.

What is NEFT?

NEFT is an electronic payment system that allows individuals to transfer funds from one bank account to another. Funds transferred under NEFT are settled in batches in hourly time slots. It can take anywhere between 2-24 hrs for a NEFT transfer.

While there is no minimum limit of transferring through NEFT, private banks have set maximum limits for money transfer. Therefore, this mode of payment is quite relevant for businesses who wish to carry out direct transfers with a large amount of sum involved.

Earlier, NEFT could only be done during the banking hours, from 8:00 am to 7:45 pm on all working days. No NEFT transactions used to happen on second, fourth Saturdays and bank holidays. However, from now on, the NEFT facility will be available on all days of the year, including holidays. 

Other Features of 24*7 NEFT Facility

1. There will be 48 half-hourly batches every day. The settlement of first batch will commence after 00:30 hours and the last batch will end at 00:00 hours.
2. NEFT transactions after usual banking hours of banks are expected to be automated transactions initiated using ‘Straight Through Processing (STP)’ modes by the banks.
3. The existing discipline for crediting beneficiary’s account or returning the transaction (within 2 hours of settlement of the respective batch) to originating bank will continue.
4. Member banks will ensure sending of positive confirmation message (N10) for all NEFT credits.
5. All provisions of NEFT procedural guidelines will be applicable for NEFT 24×7 transactions as well.

Benefits of 24*7 NEFT for Your Small Business

1. Improved Cash Flow – This new feature would allow people to make payments round the clock – wherever and whenever they want. Therefore, as an online retailer, you can expect timely payments and improved cash flow in your business with this feature, post-December. You can also improve your cash flow by enabling PayU’s Same Day Settlements feature.
2. Zero Transaction Charges – In June this year, RBI had waived off NEFT/RTGS processing charges to promote digital payments amongst small businesses. Earlier, banks were charging between Rs 30 and Rs 55 for a single RTGS transaction, and upto Rs 20 for NEFT transfers.
3. Track Payments – If you are making any bulk transfers through NEFT, you don’t have to worry about keeping a track of it. You can check your payments anytime, anywhere. PayUmoney’s powerful dashboard too allows you to track, manage and reconcile payments made through NEFT or any other medium. You will receive a notification on your registered mobile number and PayUmoney dashboard for every transaction you make through NEFT.

Interestingly, RBI also wants to bring in a central fraud regulatory system to track fraud transactions. This too will help build digital payments ecosystem stronger as more businesses will feel secure about their payments.

According to RBI’s vision document for e-payments which outlines the road map for 2019-2021:

E-payment systems such as IMPS/UPI will register an average annualized growth of over 100% and NEFT 40% till 2021.

Number of digital transactions is expected to increase more than four times.

Cheque-based payments are expected to dip to under 2% of the retail electronic transactions.

Conclusion

It is encouraging to see the government taking steps to empower e-payments customer experience across the country. On the whole, this will be a win-win situation for online small businesses and customers.

PayU is a one-stop online payment solution for businesses. With more than 4.5 lakh merchants and growing, we give our merchants an opportunity to give their customers a seamless checkout experience, expand the reach and grow their business. For more details,

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