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Raghuram Rajan gifts India with long awaited UPI system in 21 banks; inches closer to cashless transfer

Before Reserve Bank of India’s Governor Raghuram Rajan’s tenure comes to an end, the finance sector saw the launch of much awaited Unified Payments Interface (UPI) system.

Updated: August 27, 2016 10:39 AM IST

By Sandhya Dangwal

Raghuram Rajan gifts India with long awaited UPI system in 21 banks; inches closer to cashless transfer

New Delhi, Aug 26: Before Reserve Bank of India’s Governor Raghuram Rajan’s tenure comes to an end on 4th September 2016, the finance sector saw the launch of much awaited Unified Payments Interface (UPI) system. Rajan, on Thursday turned smartphone into a bank by making live the UPI, his brainchild in 21 banks. With this move, the Indian economy will move closer to a cashless future and help customers to make easy payments and transfer money to anyone in just a click.

The National Payments Corporation of India (NPCI) permitted apps for 21 banks. Out of the 21 banks, four banks namely, Axis Bank Ltd, Union Bank of India, Federal Bank Ltd and Bank of Maharashtra went live on Thursday on the Google Play Store while the rest will be available on Google Play Store within three days. With this launch, one can easily transfer payments to other persons through a unique virtual address, or mobile number, or Aadhaar number. NPCI has permitted only those banks with 1,000 pilot customers, 5,000 transactions and a success rate of around 80% or more to go live. (ALSO READ: Had fantastic tenure; results to be visible in 5-6 years: Raghuram Rajan)

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The UPI system allows you to pay for transactions as low as Rs 50 and go all the way up to Rs 1 lakh. Also, payments can be made between people, grocery shopping and online shopping as well. Once registered, a unique ‘virtual address’ will be generated that shall be mapped with the user’s mobile phone. (ALSO READ: Raghuram Rajan hits out at critics, advises next RBI Governor to continue fight against inflation)

“This is the first phase of UPI apps. The second phase will see more banks joining the UPI system. We are going live on the app store today (Thursday) evening with Axis Pay app. We have already sent out the app for upload and usually it takes 4-6 hours to show up on the app store. If you are our customer or a customer of any bank that is part of the NPCI list of banks released today, you will be able to do a transaction,” said Sangram Singh, head, cards and payments business, Axis Bank.

“We are in the process of development and certification of UPI-enabled app. We will be launching a new app for it as we believe that there are different use cases for payment process. It should be out in 4-6 weeks,” said Deepak Sharma, chief digital officer, Kotak Mahindra Bank. (ALSO READ: RBI Governor Raghuram Rajan announces will step down in September)

Versions for Apple’s iOS operating system will take up to six months to go live. The UPI-enabled apps of 19 banks, including ICICI Bank Ltd, Canara Bank and Andhra Bank, will be available on the Google Play Store for customers to download in the next 2-3 working days. In the next 3-6 weeks, lenders such as State Bank of India, HDFC Bank Ltd and Kotak Mahindra Bank Ltd are likely to go live with UPI-enabled apps, Live Mint reported. (ALSO READ: Unified Payments Interface to go live for 21 banks’ customers: Here’s the list of banks with UPI)

What is Unified Payment Interface (UPI)?

Unified Payment Interface (UPI) is a payment system through with money can be transferred using a mobile phone. The UPI system will allow customers to safely and instantaneously transfer funds almost as easily as they send a text message. The UPI based system uses a single identifier that cuts the need to exchange secret information like bank account numbers or credit card. Neither the payer nor the payee will have to share their bank account details with each other thus making it safe. The UPI system will be available only for bank customers with Android smartphones initially.

How is UPI different from other banking apps?

Every bank has its own app and wants asks you to download its app to carry on any transactions.The problem arises when a person has two accounts and will have to download two apps. With UPI based system, the customer needs to download only one app that will network all the banks together. UPI is integrated with your bank’s app. This would however, make it possible for the customer to make her transactions using a single app.

How does it work?

The UPI system only needs a smartphone. Any Android smartphone user who has an account with a UPI-partnered bank can download the app to make person-to-person and e-commerce transactions. The app will use a virtual address such as name@bankname.com or mobilenumber@bankname.com.

How is it different from NEFT or RTGS transfer?

The Unified Payments Interface (UPI) is built on the same infrastructure as that of Immediate Payment Service (IMPS). It works in a totally different manner as compared to  RTGS (Real Time Gross Settlement) and NEFT (National Electronic Fund Transfer). For the transaction to be made, all that you need is a smartphone for instant, online bank payments. The UPI services can be used anytime, any where unlike the NEFT and RTGS which have specific work hours.UPI will work 24 hours and on all seven days. This newly launched system is expected to revolutionize the way consumers make payments online. Since the transaction is based on authentication no one can carry on the  transaction without your Unique Code and mobile.

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