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Learn|||International Payment Rails

What is the Unified Payments Interface (UPI)?

Unified Payments Interface (UPI) is a real-time payments system for mobile applications. Designed and launched by the National Payments Corporation of India (NPCI) in 2016, UPI facilitates instant money movement between bank accounts, 24x7x365.

UPI is currently regulated by the Reserve Bank of India (RBI) and is widely utilized for both B2B and P2P payments. In 2021, $940 billion dollars was moved via UPI; in 2022, the average monthly transaction count was over six billion.

How does UPI work?

With UPI, users can access multiple bank accounts in a single mobile application, allowing them to move money in real time. This technology has served as a model for other notable payment systems—as Google CEO Sundar Pichai shares, his team built Google Pay based on the UPI stack.

Once they’ve set up a profile, users of UPI are not required to enter personally identifiable information (PII) like bank account details to make transactions. Because they use a pin code instead, UPI is more secure for users than other mobile payment methods.

The UPI system allows for both push and pull payments; users can issue a pay request to send funds to an intended payee, or a collect request when requesting funds from an intended payer.

For a pay request (to push funds):

  • A user logs into the UPI app and choses to send money/payment.
  • They enter the payee’s virtual id, followed by the amount being debited. The payer then selects the account funds will be drawn from.
  • After reviewing a confirmation screen with payment details, the payer enters their pin to initiate the transaction. They will then receive either a success or failure message.

For a collection request (to pull funds):

  • A payee logs into the UPI app and choses to collect money (i.e., an RFP).
  • They enter the payer’s virtual id, followed by the amount being credited. The payee then selects the account where funds should be deposited.
  • Once the payee confirms transaction details, the payer will receive a mobile request for payment. When they open the notification in their UPI app, the payer can review the request and either accept or decline it.
  • To accept the request for payment, the payer will enter their pin. Both parties will then receive a notification once the payment is completed.

UPI enables QR codes and powers multiple use cases, from merchant over-the-counter sales to recurring bill pay for services like utilities. The UPI application also includes banking features like the ability to view account balances.

Where is UPI available?

The global arm of NCPI, the National Payments Corporation of India International Payments (NIPL) has successfully expanded UPI internationally, with support from RBI. UPI is currently available in 10 countries spanning Asia and Europe. India is also in talks with 30 countries to further potential expansion.

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