UPI – How it works?

Unified Payments Interface (UPI)



In a bid to revolutionise the e-banking system of India, the Reserve Bank of India governor Raghuram Rajan and the National Payments Corporation of India (NPCI) has launched a Unified Payments Interface (UPI) in the form of a mobile app, which will make monetary transactions simple and faster.



All you will need is a smartphone. This app can be used for the transaction of any amount of money below Rs 1 lakh, that can be something as low as Rs 50.


How will this app help?



This app will be very effective for making third-party payments. Today, if you have to pay money to someone else, you will need their account number, IFSC code, branch detail etc and you also have to add that person as a beneficiary.


With the help of the UPI app, you don’t require any of that. All you will need is the receiver’s unique ID.


You can share money with anyone with this app directly from account to account, without using cash.


Also, you can use the app for making e-commerce payments and cash on delivery payments. After receiving the product you will need the firm’s unique ID and make the payment instantly.


Another great feature of the UPI is that you don’t need any specific bank’s account to be able to make transactions. You can use any bank’s UPI system to transfer money or make payments.


What Will UPI Work on?



It is a mobile interface and will work on mobile phones only.


How many banks are associated?


Presently only 10 banks are associated with this system, but soon many other banks are expected to join.


How to use the UPI app?


If you have a bank account, you need to download the UPI app of a bank from Google PlayStore.


You have to register your bank account and then you will have to create a unique ID, then a mobile pin will be generated.

You can also link your Aadhaar number.


While making payments, select the amount you have to pay, add the unique ID of the recipient. Then you have to select ‘send’.


The app will ask for a mobile pin to authenticate the payment after which it is done.


With the advancement of the digital system and the growth in the number of mobile banking users, the RBI and NPCI are taking these initiatives to minimise cash transactions.


This is part of Digital India, soon we will see more Improvement in banking system.

Vector illustration of mobile payment via smartphone.

[Image Credit: nationalmerchants.org]