What is UPI and How Unified Payments Interface Does it Work?

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What is UPI and How Unified Payments Interface Does it Work?

UPI, or the Unified Payments Interface, allows multiple bank accounts to connect on a mobile device. It is also a way to merge many banking features and continue a seamless merchant payment and fund routing under one umbrella. Primarily, the Unified Payments Interface can be used as a payment system among merchants and peers. It's a convenient way of conducting your financial business without going to the bank. 

UPI has been a great benefit for people around the country, and it can be used entirely for free to make as many transactions as you want. Therefore, you can learn about the Interface and benefit from all its various uses. 

What is a UPI Transaction?

A UPI transaction is a method of transferring money from one bank account to another. With a UPI, you can send money to anyone from anywhere in the country. You can process the online transaction using a QR code, mobile number, account number, or UPI ID. The payment methods ensure that you can send money while being on the go. 

How do UPI Payments Work?

The Interface payments work through the Virtual Payment Address (VPA), which carries out your transaction. The National Payments Corporation of India (NPCI) has developed the United Payments Interface, regulated by the RBI. The Interface is among the most preferred forms of digital payment. At the same time, you can only make transactions using your mobile number, which should be active and connected to your bank account. 

However, only a few entities can participate in the United Payments Interface transactions. These participants include the following:

  • Payee PSP
  • Payer PSP
  • Bank account holder
  • Merchants
  • NPCI
  • Beneficiary bank
  • Remitter bank

Benefits of Using UPI to the Ecosystem Participants

Using the United Payments Interface is immensely beneficial for every kind of ecosystem participant. Below are the different ecosystem participants of the Interface and the benefits they have. 

Benefits of United Payments Interface for Merchants 

  • In-app payments (IAP)
  • Easy fund collection
  • Suitable for both m-Com and e-Com transactions
  • Resolves the hassle of cash on delivery
  • Tap customers do not need debit/credit cards

Benefits of United Payments Interface for Banks

  • Single-payment based
  • Unique identifier
  • Enables easy transactions
  • Safe and secure
  • Single-click two-factor authentication
  • Universal application for one transaction

Benefits of United Payments Interface for Customers

  • Secure use of virtual ID
  • Easily raise a complaint from your mobile application directly
  • Round-the-clock availability
  • Single application for accessing various bank accounts

How to Transfer Money Using UPI?

Transfer your money using your mobile application in all the ways given below:

Account Number

You can send money directly to anyone’s bank using your account number and a single application. 

Virtual Payment Address

Use your Interface ID to request or send money from any bank account.

QR Code

You can send money using a unique QR code enclosed with your mobile number, account number, IFSC, or VPA.

Mobile Number

Your mobile number permits you to transfer your money with your mobile number mapped from your bank account. 

Registration Process in UPI-Enabled Applications

The United Payments Interface permits everyone to transfer money directly from their bank account to the receiver’s account in seconds. You can follow the steps given below to register yourself in a mobile payment application and start transferring money using the Interface:

Step 1: Download your preferred United Payments Interface mobile application. 

Step 2: Fill in your mobile number once the application is downloaded successfully. 

Step 3: SMS is sent to your number with an OTP to verify it. Fill in the OTP in the application, and continue. 

Step 4: Now, register your bank account. Select your bank name and add the mobile number that is connected to your account. Fetch all your bank information from your bank through your mobile number and confirm the details. 

Step 5: Next, set up a PIN code. (This step is for those linking their account for the first time.) You will also need your debit card details to set up your account. 

Step 6: After linking your bank account, be ready to make your first payment through the application and the United Payments Interface. 

What Makes Unified Payments Interface Unique?

Several elements make the Unified Payments Interface unique, and some of these elements include the following:

  • United Payments Interface facilitates the transfer of money using mobile devices immediately, 24/7. 
  • Get high financial security with your virtual address without entering information such as the account number, IFSC code, or card number. 
  • Access two-factor authentication with a single click that provides a seamless payment process. 
  • You can easily share your bills with your friends. 
  • Remove the hassle of going to an ATM or paying cash on delivery. 
  • You can also make collections, disbursements, and donations easily. 
  • You can also make over-the-counter payments, utility bill payments, and barcode (scan and pay) based payments. 


The United Payments Interface transactions are extremely useful, and they have revolutionised the financial scene by making it easy to exchange money over a highly secure encryption format. Millions of people access and use the Interface regularly to conduct their business in seconds. It is the convenience and simplicity of UPI that have attracted a lot of people towards it. 

  • Is it safe to use the United Payments Interface?

  • What is the limit for the United Payments Interface?

  • What does UPI stand for?

  • Is it mandatory to only use the bank application for UPI transactions?

  • Is it possible to link more than one bank account to a single UPI application?