Finally a post on UPI or Unified Payment Interface :). In last 3 months, i received numerous requests from the readers of the blog to share my views on UPI. Honestly, i was waiting for the dust to settle down and launch of HDFC Bank’s and SBI’s UPI App. As i mentioned in my “About” page that i will share what you don’t know. Therefore, i took some time to came up with a dedicated post on UPI.
In my opinion, UPI is sort of financial revolution. Wherein you need to remember only a virtual private address to make or receive payment. It is truly a step forward towards a cashless economy. You need not remember details of multiple bank accounts. Trust me, i don’t remember account no, IFSC code etc of my bank accounts :).
In last few days, i did an extensive study on UPI apps. I downloaded all the UPI apps available on Google Play Store i.e. Android platform. Currently, none of the UPI apps is available on iOS. I hope shortly it will be available. Please note that at macro level UPI is not as simple as it is perceived. A lot of hard work has gone behind. Though operationally you will not face any issue besides some technical glitches. That is understandable during the initial phase. Another observation is that it seems almost all the UPI apps of PSU banks are developed by the same developer. The flow, functionality, features etc are almost similar in nature :).
UPI or Unified Payment Interface – 15 Imp Points You Should Know
1. Mobile No and Bank Account No:
As a layman, my conclusion is that the mobile no registered with the bank is the core of UPI. The basic framework of IMPS is used to build UPI functionality by NPCI (National Payment Corporation of India). It sounds very simple but very complex. There is a possibility that UPI app will not be able to find out your bank account if you are not a registered mobile banking user. Though NPCI document mentioned that VPA or Virtual Payment Address can be linked to Account No and IFSC code but i fail to understand how? Without registered mobile no. you cannot register for UPI. The only possibility is if i registered for IMPS or Immediate Payment Service using Account No and IFSC code along with mob no in the back-end.
The simple logic is One Mobile No >> Multiple Virtual Payment Addresses >> Multiple Bank Accounts. The app part i will discuss in next point. In other words, for one mobile no. you can have multiple VPA’s. Each VPA can be linked to all the bank accounts or individually to each bank account depending on the functionality of the app. Therefore, mobile no is the center of the universe. If you have multiple mobile no’s linked to multiple bank accounts then you need multiple UPI apps i.e. precisely one app for each mobile no. I will discuss it in next point.
If you will try to register with mob no not registered with the bank then registration will never complete. This is one of the reasons why so many people are complaining that they are not able to use UPI. Another reason is dual SIM handset discussed in point no 5.
2. One UPI App for One Mobile No:
Let me take an example. I have bank account A with registered mobile no X and account B with registered mobile no Y. I cannot link both the accounts through a single Unified Payment Interface app. In other words, One UPI App >> One Mobile No >> One or Multiple Virtual Payment Addresses >> Multiple Bank Accounts linked to same mobile no.
In short, if you have 2 different mobile no’s linked to 2 different or more bank accounts then you need 2 apps i.e. one each for one mob no. Therefore, it is wrong perception that you can link all your bank accounts through a single app. It is true if all your bank accounts are linked to single mob no. In this case, there is another problem that i will discuss in point no 11
3. Connectivity/Technical Issue:
As a user, i faced problem on the operational front. As it is large scale project, therefore, you can always expect teething issues initially. In my case, Account No A and Account No B linked to same mobile no were throwing errors with different UPI Apps. For example, with App X, i was able to link to both the accounts whereas App Y linked only Account A and i nearly got a heart attack with App Z, it showed an error that “No Account found against your mobile number”. For time being, you should ignore all the connectivity and technical issues till the platform stabilizes.
I also checked the review of all the UPI apps but could not find the so called perfect app. Each UPI app has its own limitations and shortcomings. Moreover, it also depends on your requirement. If you are looking for an app with wallet then you may check ICICI Pockets or Yes Pay. If you are looking for a plain vanilla app then you may explore apps of PSU banks.
4. Virtual Payment Address: I spent a lot of time to search for right virtual payment address or VPA. As i was waiting for SBI UPI app i.e. SBI Pay, i got VPA of my choice. In the case of other UPI apps, i could not find right virtual payment address. VPA is similar to your email id i.e. username@psp where PSP is payment service provider or a bank. Some of the apps allow numerical VPA i.e. 948002100@icici or 9480021000@hdfcbank. Many apps don’t allow numerical VPA. I missed the bus as i could not get VPA of choice with my preferred UPI app. In another case, i don’t like the PSP of some banks.
As an individual, i always believe that email/mob no and VPA (Recently added to the list), should be easily remembered by others. Therefore, being an early mover you can get the desired username and after some time it will be difficult to get. It is more important in case you are businessmen, freelancer, service provider, vendor etc. I registered payment@Bank A for business use and nitinbhatia@Bank B for personal use.
Now there is a big catch here. The catch is you cannot change your mobile no. In case you change your mobile, you need to re-register with UPI. In other words, you will lose your VPA (Virtual Payment Address). In my opinion, it is big negative. As a user, i would not like to lose my VPA. The reason being, once i circulate my VPA to my family friends, clients, friends etc then it is very difficult to intimate any change. This is the biggest risk you will carry. Moreover, the same VPA cannot be used for at least 2 years once it is de-registered or deactivated by the customer.
In short, if i change my mobile no linked to VPA of Bank A then i cannot use VPA payment@Bank A for next 2 years :(.
5. Dual SIM Phone: Many users are complaining about SMS Authentication failure. Thanks to your dual SIM Phone. In every dual SIM handset. Two type of settings is possible i.e. to set Mob No A / Mob No B as default or none of the Mob no is set as a default i.e choose the no at the time of call/SMS.
I came across 3 types of UPI App
(a) App insisted on setting particular Mob No as default at the time of registration. For example, i am registering with Mob A then my default Mob No should A. Once i register, i can log in to the app with any of the Mob No as default i.e. Mob A or Mob B. The example is SBI Pay.
(b) The App like Yes Pay insists you to set registered Mob No as default for both registration and login. For example, if i register with Mob No A then both at the time of registration and login, Mob No A should be the default. It’s a big hassle if Mob No A is not your default Mob No.
(c) The 3rd set is user-friendly Apps. Their only pre-conditions is that registered mob no should one of the SIM/Mob No of dual SIM handset. These apps give you the option to select SIM at the time of registration and login even if the registered mob no is not set as default.
Please note that if you remove registered mob no from your handset then you will not be able to login even if the app is installed on the handset. The app will check whether the mob no/SIM is available/inserted in the handset or not. I think it is a security feature to prevent misuse of the UPI.
6. Dispute Resolution:
This is one of the gray areas. For example, as a sender, i installed the app of Bank A and linked account of Bank B with UPI app of Bank A. Similarly, receiver linked account of Bank C with the UPI App of Bank D. It is very complex. There are 4 parties involved in a single transaction. In the case of any dispute, the customer will approach Bank A, Bank B, Bank C or Bank D. It is million dollar question. Therefore, preferably you should use UPI App of your bank. This is the reason why i was waiting for HDFC Bank and SBI’s UPI App :).
7. Mobile No linked to Multiple Accounts:
Assuming you have 2 accounts with the same Bank A. Now, in this case, you cannot register any of the accounts with UPI. The only solution is to change the registered mobile no of one of the accounts. I tried to register one such account with almost all the apps but none of the apps allowed registration. Once i de-registered mobile no with one of the accounts, i was able to register both the accounts separately with 2 different apps as registered mob no’s are different.
8. Joint Account:
What will happen if you have a joint account? The answer is simple you cannot register a joint bank account with UPI App. In my opinion, either or survivor savings account should be allowed. This is another security feature barring all joint accounts. Maybe in future UPI Apps will be more intelligent to allow at least either or survivor account to link with UPI App.
9. Bank vs Non-Bank UPI App:
This one of the biggest dilemma whether to use the app of a Bank or Non-Bank App especially mobile wallets like PhonePe. Non-Bank Apps are more feature rich. Even ICICI Bank has white label UPI app i.e. ICICI Pockets. Considering the complexity, safety, and security of transactions, i will prefer bank app that too with the bank with which i hold an account.
I am not against non-bank app but please note that RBI has allowed only Banks to provide UPI Service. In turn banks especially small banks are partnering with mobile wallets and other payment solution providers. In other words, non-bank/mobile wallet UPI app does not directly come under the regulatory framework. It is very very risky considering you are providing access to your bank account. The exception is waller cum UPI app of banks. In the case of dispute, whom you will approach. I might be sounding extra cautious but in the money matters, you should be always extra cautious.
10. Transfer within own bank accounts:
Assuming you have only one registered mob no and you linked all the bank accounts with single UPI app. The million dollar question is how will you transfer the money within your own bank accounts. I could not find any option for the same. It is possible in UPI App creating separate VPA for each account like Axis Pay. This is another reason why you can’t have a single app for all bank accounts. Therefore besides one app for each mob no you might need one app for each bank account so that you can transfer money within own bank accounts. Alternatively, an app that allows separate VPA for each account.
11. Mobile Wallet:
There is a big debate going on what will happen to mobile wallets after UPI. Though some experts are of the opinion that both will co-exist but the general consensus is that mobile wallets will gradually become redundant. This is another reason why mobile wallets are desperately trying to tie up with one of the banks providing UPI service. If they fail to do so then they will be out of business. Practically speaking even if you opt for wallet cum UPI app the wallet functionality is of no use as such. I tried myself. When you can directly transfer the money through UPI then why you will transfer money to wallet first until unless online shoppers are getting some discount.
In my opinion, mobile wallets will stay relevant till people get used to UPI. These days i have observed that new mobile wallet players are offering a lot of cashback but uptake is not as expected. The reason being too many wallets and too less loyalty. Currently wallet cum UPI apps are finding traction because of 2 in 1 feature but in my opinion, in long term, it makes sense to opt for pure UPI app offered by the bank.
12. Payment Received in default/preferred bank account:
In a UPI app, there is an option to set one of the linked accounts as default/preferred account. Therefore, if you have 5 accounts linked through the same app, you can set one of them as preferred. Now the catch is if you share your VPA with the sender then the amount will be received in preferred account.
Assuming now you wish to receive money in some other linked account then you should not forget to change the preferred account else the amount will be credited to the wrong account i.e. default account. In short, if you receive frequent payments in different accounts then you need multiple UPI apps based on your requirement.
The app like Axis Pay allows creating separate VPA for each bank account thus you will not face this issue with apps like Axis Pay.
13. Maestro Cardholders cannot use UPI service:
Currently, a large chunk of SBI customers has Maestro Card. Not many people are aware that there is no expiry date on Maestro card. It is a good feature but now it is bad news for Maestro debit card users who wish to use UPI feature. To set MPIN, you need Debit Card No and Expiry date. The SBI Pay app clearly mentioned that Maestro Cards are not enabled for this service. I was not able to set MPIN through other channels like SMS/ATM/Internet Banking.
14. Not all Banks are onboard:
As of now, 30 banks have joined UPI platform. In next 6-12 months, all the banks are expected to be on board. For example, i have State Bank of Mysore account but i cannot link this account to UPI as the bank has not joined UPI platform. Therefore, customers of all such banks will be left out. The associate banks of SBI may come onboard on SBI app after the merger.
15. Payment Tracking (Bank Details of Receiver):
In traditional payment modes like cheque/NEFT/internet banking, the sender knows in which bank account he/she is depositing the money. In some cases, it is important to know. Whereas in IMPS (MMID and Mob No) and UPI, you cannot find out in which account you are transferring the money. The reason being, the bank account of the receiver is masked. Though in the system, you can definitely track but as a sender, if i wish to know then it is not feasible. In the transaction description, you can only observe the VPA of the receiver.
For example, i created a virtual payment address nitinbhatia@yesbank. I linked my ICICI account with this VPA. If someone will transfer the money in this VPA then common perception is that it is deposited in my Yes Bank account but in reality, it is transferred to my ICICI Bank Account. It is both good and bad. Good from receiver’s perspective as he need not share his bank account details. From sender’s perspective, it is difficult to track.
Words of Wisdom:
Unified Payment Interface will revolutionize the way we make and receive payment. It is quite simple and user-friendly option to transfer the money 24×7. As i mentioned, i will prefer UPI app from the bank with which i hold my account. I have uninstalled mobile wallet apps from my mobile. Personally, i don’t like keeping too many apps on my mobile. If you need wallet you can opt for wallet cum UPI app of the banks.
Over a period of time, i am expecting that banks will enhance and upgrade the UPI apps based on user experience. As India is moving towards cashless economy i am expecting UPI or Unified Payment Interface to be the key enabler of the same. Maybe in coming years, debit cards and credit cards will be the thing of past.
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