Google & Boston Consulting Group in the past week released a comprehensive study on Digital Payments in India. The study says that India would have over 50% internet users using the medium by 2020. If one had to assess this basis the current infrastructure then most would feel that it’s an ambitious one to achieve. Reserve Bank of India released Unified Payment Interface an architecture and set of APIs to facilitate the next generation of digital payments in the country. Unified Payment Interface (UPI) has been developed by National Payments Corporation and will be built on Immediate Payment Services (IMPS) which allows for the transfer of money instantly by going online by adding another layer that allows easy debit capability even on mobile phones. IMPS saw 23,460 crores being transacted in the month May 2016 and has been going rapidly since its launch in November 2010.

Unified Payment Interface (UPI) has been developed by National Payments Corporation and will be built on Immediate Payment Services (IMPS) which allows for the transfer of money instantly by going online by adding another layer that allows easy debit capability even on mobile phones. IMPS saw 23,460 crores being transacted in the month May 2016 and has been going rapidly since its launch in November 2010.

Unified Payment Interface removes the hassles that a consumer faces while paying from credit or debit card and also using card data, brings its own security problems. Instead, UPI uses a virtual address the merchant only gets your virtual address and they store your payment against it. The merchant never gets to see your actual address. For example, your virtual address could be something like Yourname@ICICI.

All transaction done using UPI will be reflected in IMPS. All wallets are not included in UPI and as for now, it’s a cross-bank transfer medium. UPI transaction would require your account number and an MPIN which is generally issued by your bank for 2-factor authentication which is mandated by Reserve Bank of India. Adoption of UPI now depends on the developers & designers who are going to use them to build applications. It’s essential that the overall experience has to be user-friendly to bring more consumers to use the medium. Flipkart has already mentioned that its platform PhonePe will be built on UPI framework

Here is an infographic that illustrates how Unified Payment Interface works?

Unified-Payment-Interface-Works

If you want to know more about Unified Payment Interface the below articles should help:

How UPI will disrupt the concept of payments in India?

UPI & Mobile Wallets? Here’s why everyone has got this wrong

What is UPI?