Does the UPI score better than E-Wallets, NEFT and IMPS?


Has the Unified Payments Interface (UPI) come to reign supreme over all other ways and means of making online payments? Do e-wallets like Paytm, and online banking transactional methods like the NEFT and RTGS now take the back seat? Figure out the answer yourself as you read on…

It is no secret in the rise of smart phone usage for online transactions.The figures rocketed from less than a crore of monthly transactions in 2012 to more than 63000 crores in 2016. Much of the rise occurring post the demonetization drive.

The Unified Payment Interface was launched by the National Payments Corporation of India in association with the RBI and the Indian Banks Association. What’s the UPI anyway?

It is a technology that uses the Smart phone as its platform to facilitate the immediate transfer of funds without cash, debit or credit card between the transferor and the transferee. This transfer can be done between people, organizations or between a person and an organization.


Does this flexibility and versatile nature of the UPI raised questions about its safety for online transactions? Yes it does. With a two factor authentication, the UPI uses a virtual ID and M-PIN which are constants. The transaction is also encrypted.

Now’s let’s answer the actual question. Does the UPI score better than other payment methods?

The first and foremost attribute of the UPI is its lack of need for a lot of authentication. Many online transactions require a lot of details like the debit or credit card number, the expiry date, an OTP, a PIN and a CVV number. In case of NEFT transactions the account no or customer ID, Internet Banking ID, password and answer to security questions. With the UPI you just have to enter only the M-PIN once the user is registered.

How does the UPI score with E-wallets?

Patym and Freecharge require both the transferor and the transferee to have the apps. The e-wallet also needs refilling from time to time depending on the volume and frequency of the transactions. The use of E-wallets is restricted by prevalence and popularity of the app. The UPI is centralized can be used across merchants and banks it scores over the E-wallet by not having the additional process of refilling the wallet.

How does it score over NEFT and RTGS?

Banking hours and holiday restrictions and a minimum limit of 2,00,000 for RTGS with charges ranging from INR 25 – 50 excluding service tax make it a impractical choice for small payments. NEFT transactions are limited to a few hours and the charges range from INR 2.50/- to 50/- plus service tax. UPI transactions are proposed to be at INR 0.50/- but it’s free right now. It can be used to an amount of INR 1,00,000/-

How does the UPI score over IMPS?

We must say that the IMPS and UPI are similar. Although the UPI is built on the same architecture of the IMPS it has the ability to perform push and pull transactions. What are push and pull transactions? If Shashi has borrowed INR 11,000/- from Arjun and he wants it back, Arjun can send a payment request to Shashi and if she approves it, Arjun would get his 11000/- credited back to his bank account. This is an example of a pull transaction which is not possible in an IMPS.  In addition to this, you will need different MMIDs for different bank accounts while transacting through IMPS. UPI makes transactions simpler by using one virtual ID which can be linked to all your different accounts.

Get UPI within a few minutes

  1. You need a smart phone to use the UPI app. Download the app from any of the banks that offer the UPI application or the TruPay app which is powered by some bank.
  2. The UPI application can be downloaded from any bank. If you hold an ICICI bank account you can use an SBI app.
  3. Register yourself on the app. Create a PIN and a virtual address. The example of a virtual address can be < Your mobile number@ Bank > of name@bank or some alphanumeric@bank
  4. Now add all your bank accounts that should be linked to the address.
  5. You will get a notification asking you about an MPIN. If you do not have one create one using the app or the bank’s website.
  6. You are all set now. Start using the UPI.

The UPI is an easy way to transfer cash and make payments online. Use it to pay your bills, shop online or transfer cash easily. Break away from steps like waiting for the OTP or keying in answers to security questions. Large all small payments will now become easier and smoother to make.

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