Benefits of Unified Payments Interface (UPI)
- Customers merely share a virtual address and give no other critical information, therefore it is secure. Your bank account is used as an alias for the “virtual payment address.”
- When a specific merchant’s account is hacked, your security cannot be compromised because their database will only include a list of virtual addresses.
- Compared to other payment methods that send sensitive information like credit card numbers, it provides superior security. All of these information is concealed when utilizing UPI because just a Virtual Payment Address (VPA) is utilized.
- With digitalization, the market’s black money can be diminished, increasing compliance and increasing tax revenue.
- The UPI has significantly impacted both the fintech sector and banks. It helps banks cut costs associated with merchant onboarding and offers them a low-cost alternative to cash.
Unified Payments Interface (UPI) and its Challenges
A system called the Unified Payments Interface (UPI) combines several bank accounts. It makes easy fund routing, and merchant payments into a single mobile application (of any participating bank). Additionally, it supports “Peer to Peer” collect requests that may be planned and paid for according to need and convenience. It is an immediate real-time payment system that enables customers to transfer money between different bank accounts in real-time without disclosing personal information to the other party. The National Payments Corporation of India (NPCI), which is governed by the Reserve Bank of India (RBI) and IBA (Indian Bank Association), established the concept of UPI.