UPI - Unified Payment Interface

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• UPI - Unified Payment Interface

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• The way we undertake money transactions in India
  is expected to change dramatically with the
  introduction of the Unified Payment Interface
  (UPI), which aims to move the country towards a
  more cashless model. Developed by The National
  Payment Corporation of India (NPCI), the payment
  interface is expected to be a game changer in
  mobile banking.
• Shikha Sharma, managing director and CEO of Axis
  Bank, considers UPI the WhatsApp moment for
  payments in India.
• The Reserve Bank of India (RBI) in its Payment
  System Vision Document (2012-2015) had mentioned
  the use of UPI for achieving its goal of a lower
  cash-intensive society and financial inclusion
  using the latest technology.
• Heres a closer look at what the RBI is trying to
  achieve through UPI and how it will make our
  lives easier. But before that, lets look at the
  current status of non-cash transactions in the
  country.

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• According to an NPCI document, the number of
  non-cash transactions per person stands at just 6
  per year. Only a fraction of the 10 million-plus
  retailers in India have card payment acceptance
  infrastructure presently this number stands at
  0.6 million, or 6. What these numbers reflect is
  the potential that exists as penetration of smart
  phones is projected to increase from the current
  level of 150 million to 500 million over the next
  few years.
• What are the key drivers of UPI?
• The NPCI document points out that the key goal of
  implementing UPI was to simplify and provide a
  single interface across all segments. The key
  drivers for this are
• Simplicity The thinking behind the UPI was to
  make the application as simple as possible.
  Paying and receiving payments should be as easy
  as swiping a phonebook entry and making a call on
  mobile phone, says the document. An account
  holder should be able to send and receive money
  from their mobile phone with just an identifier
  without having any other bank/account details.
  All they need to do is to "pay to" or "collect
  from" a payment address (such as Aadhaar
  number, Mobile number, RuPay Card, virtual
  payment address, etc.) with a single click.

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• Innovation The idea here was to come up with a
  solution so that innovations on both payee and
  payer side can evolve without having to change
  the whole interface. It should allow application
  providers to take advantage of enhancements in
  mobile devices, provide integrated payments on
  new consumer devices provide innovative user
  interface features, take advantage of newer
  authentication services, etc.
• Adoption Given the size of the potential user
  base, the key was to have a solution which should
  not crash and be scalable to a billion users and
  enable large scale adoption. It should allow
  gradual adoption across smartphone and feature
  phone users and provide full interoperability
  across all payment players, phones, and use
  cases. People using smartphone should be able to
  send money to others who are not yet using any
  mobile application and vice versa. Similarly, it
  should allow full interoperability between
  multiple identifiers such as Aadhaar number,
  mobile number, and new virtual payment addresses.

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• Security One of the key areas of concern among
  users is security. The solution had to provide
  end-to-end strong security and data protection.
  The trick here was not to reveal too much data
  like banking or other personal details which
  could be misused. For convenience, the solution
  also had to offer 1-click 2-factor
  authentication, protection from phishing, risk
  scoring, etc.
• Cost India is a cost-conscious country and any
  product with a high cost is likely to have a
  short life. Since mobile phone number is used as
  an authentication (credential capture) device,
  use of virtual payment addresses, and use of
  third party portable authentication schemes such
  as Aadhaar should allow both acquiring side and
  issuing side cost to be driven down.

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• What are the objectives of Unified Payment
  Interface?
• The key objective of a unified system is to offer
  an architecture to facilitate next generation
  online immediate payments leveraging trends such
  as increasing smartphone adoption, Indian
  language interfaces, and universal access to
  Internet and data.
• UPI is expected to further propel easy instant
  payments via mobile, web, and other applications.
  The payments can be both sender (payer) and
  receiver (payee) initiated and will be carried
  out in a secure, convenient, and integrated
  fashion. Virtual payment addresses, 1-click
  2-factor authentication, Aadhaar integration, use
  of payers smartphone for secure credential
  capture, etc. are some of the core features. It
  supports the growth of e-commerce, while
  simultaneously meeting the target of financial
  inclusion.

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• Who can use Unified Payment Interface?
• Anyone with a mobile phone and a bank account
  will be able to take benefit of UPI for either
  receiving or transferring money.
• How is it different from the existing system?
• In the present system, in order to make any
  transaction the account holders bank IFSC code
  is needed, which reveals bank account details.
  But using UPI, all one needs is a virtual address
  which is unique to you and it camouflages the
  bank and personal detail of the user or the
  receiver behind it.
• What is the level of security in UPI?
• UPI has a single click-two factor authentication
  system which means that with one click the
  transaction is authenticated at two levels. The
  user will need a mobile phone with a mobile pin
  called MPIN and a virtual ID offered by the
  provider. With a click the transaction is checked
  if the mobile pin matches with the virtual
  address only then does the transaction goes
  through.

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• Here is an example to explain the process.
• Suppose you have bought some goods at a mall and
  need to make a payment for it. You have to inform
  your virtual address to the person at the counter
  who enters the address in his or her system. The
  malls system then sends an authentication
  message to the virtual address which is mapped to
  your mobile. Only after receiving the message and
  acknowledging it by entering your password is the
  transaction complete and the amount debited from
  your bank account or wallet.
• Is virtual address unique to the user?
• Virtual addresses offered by the provider need
  not be permanent. For example, a provider may
  offer one time use addresses or amount/time
  limited addresses to customers. In addition,
  innovative usage of virtual addresses such as
  "limit to specific payees" (e.g., a virtual
  address that is whitelisted only for transactions
  from IRCTC) can help increase security without
  sacrificing convenience. PSPs can allow their
  customers to create any number of virtual payment
  addresses and allow attaching various
  authorisation rules to them.
• Source http//bit.ly/2og6ziu

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