International Journal of Applied Science and Engineering 5(1): June, 2017: p.

29-42

DOI: 10.5958/2322-0465.2017.00004.1
©2017 New Delhi Publishers. All rights reserved

Unified Payment Interface (UPI): A Cashless Indian

e-Transaction Process
Somanjoli Mohapatra

Assistant Professor, Department of Computer Science, St. Claret College, Bangalore, Karnataka, India

Corresponding author: prof.somanjoli@gmail.com

ABSTRACT
Payment systems in India have undergone rapid changes during the past few years. The Vision Document
on Payment Systems released by the Reserve Bank of India states several measures for building a ‘less
cash’ society. The adoptions of mobile and card payment systems are two key components of this initiative.
This paper presents an overview of a transformational project initiated recently by the National Payments
Corporation of India (NPCI). This article aims to empower the bank customer to ‘send’ and ‘collect’ money
in real time with just an e-mail, like a financial address, both for person-to- person (P2P) payments and
Business to Consumer (B2C) Collect. This paper also includes the comparison study of different UPI Apps.
Keywords: NPCI, UPI, PSP, 2-FA, AEPS, APB

NPCI received the Certificate of Commencement of Business in April 2009. NPCI has 10 promoter
banks namely, State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of
India, Bank of India, ICICI Bank, HDFC Bank, Citibank and HSBC. NPCI aims to create infrastructure
which rests on the principle of large scale and high volumes resulting in payment services at a fraction
of the present cost structure. NPCI operates on an asset-light business strategy in the payment industry
in India. The industry is at an inflexion point led by fast-changing consumer behavior, government/
regulatory initiatives, ever-increasing entrepreneurial activity and strong investor appetite. NPCI is
playing a pivotal role in evolving digital payment industry in India through multiple products, including
the flagship products – RuPay and UPI.[1][3][6]
RuPay is NPCI’s card payment network which is accepted at ATMs, PoS machines and e-commerce
sites. RuPay offers lower charges than its global competitors like Visa and MasterCard. Key benefits
of RuPay includes lower cost and affordability, and penetration in the untapped/unexplored consumer
 Mohapatra

segment. RuPay card is uniquely positioned to offer complete inter-operability between various payments
channels and products.

Fig. 1: Mobile Payment Ecosystem in India[4]

Fig. 2: Conceptual Model of Universal Electronic Payments

UNIFIED PAYMENTS INTERFACE: UPI

UPI is a simple payment tool created by NPCI that is based on IMPS system. UPI can operate on a smart
phone and it works as an email ID for money. It facilitates virtual Payment address (VPA: A VPA is an ID,
which a user creates by linking their accounts to a bank’s mobile application) as a payment identifier for
sending and collecting money and works on single click 2 factor authentications (2-FA). It also provides
an option for scheduling push and pull transactions for various purposes like sharing bills among peers.
One can use UPI app instead of paying cash on delivery on receipt of product from online shopping
websites and can perform miscellaneous expenses like paying utility bills, over the counter payments,

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 Unified Payment Interface (UPI): A Cashless Indian e-Transaction Process

barcode (scan and pay) based payments, donations, school fees and other such unique and innovative use
cases. UPI will offer a facility to identify a bank customer with an email-like virtual address. It allows
a customer to have multiple virtual addresses for multiple accounts in various banks. To ensure privacy
of customer’s data, there is no account number mapper anywhere other than the customer’s own bank.
This allows the customer to freely share the financial address with others. A customer can also decide to
use the mobile number as the name instead of the short name for the virtual address.[1][2][7]

Features of UPI

™™ Immediate money transfer through mobile device round the clock 24*7 and 365 days.
™™ Single mobile application for accessing different bank accounts
™™ Single Click 2 Factor Authentication – Aligned with the Regulatory guidelines, yet provides for
a very strong feature of seamless single click payment.
™™ Virtual address of the customer for Pull & Push provides for incremental security with the
customer not required to enter the details such as Card no, Account number; IFSC etc.
™™ Bill Sharing with friends, Best answer to Cash on Delivery hassle, running to an ATM or rendering
exact amount, Merchant Payment with Single Application or In-App Payments, Utility Bill
Payments, Over the Counter Payments, Barcode (Scan and Pay) based payments, Donations,
Collections, Disbursements Scalable.
™™ Raising Complaint from Mobile App directly.

UPI PRODUCT
There are two types of UPI Products:[5][9]

1. Financial Transactions: UPI supports the following financial transactions.

~~ Pay Request: A Pay Request is a transaction where the initiating customer is pushing funds
to the intended beneficiary. Payment Addresses include Mobile Number & Mobile Money
Identifier (MMID), Account Number & IFSC and Virtual ID.
~~ Collect Request: A Collect Request is a transaction where the customer is pulling funds from
the intended remitter by using Virtual ID.

2. Non-Financial Transactions: UPI will support following types of non-financial transactions:

~~ Mobile Banking Registration

~~ Generate One Time Password (OTP)
~~ Set/Change PIN
~~ Check Transaction Status
~~ Raise Dispute/Raise query

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Technical Architecture of UPI Gateway

Fig. 3: Architecture of UPI Gateway[4][5][8]

UPI TRANSACTION FLOW WITH E-COMMERCE SITE

Fig. 4: Steps for UPI Transaction Flow

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 Unified Payment Interface (UPI): A Cashless Indian e-Transaction Process

The Process Comprises of following steps:

™™ Costumer selects a Product or Service.

™™ Costumer selects payment method as net banking.
™™ He or she selects the bank with which he or she has an account.
™™ The costumer is routed towards the bank website.
™™ Costumer enters his or her Customer ID and Mobile Pin (MPIN).
™™ Then he or she waits for the OTP to arrive on his or her registered mobile.
™™ Then Customer enters the OTP and logs into the account.
™™ Then he or she selects the account and confirm the order.
™™ The payment confirmation or rejection message will be received.
™™ Finally Customer is routed back to e-Commerce site.

PAYMENTS STRUCTURE OF UPI

Direct Pay
™™ Sender Initiated: Sender provides his credentials and receiver`s virtual address using his payment
application.
™™ System initiated: Digitally signed request with receiver virtual address.

Sending Money on UPI

Fig. 5: Flowchart of Sending Money using UPI[2][6]

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Fig. 6: Pay Money on UPI through Mobile

Fig. 7: Direct Pay Transaction Flow

Collect Pay

™™ Remote Collect: Payee send the request to the payer (through USSD or Smartphone) on his phone.
So the payee doesn`t have to enter any credential. Local exchange of encrypted credential is not

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 Unified Payment Interface (UPI): A Cashless Indian e-Transaction Process

currently supported in UPI.The sender`s phone on the arrival of request become point of entry
of secure credentials.
™™ Local Collect: Here the payer`s address is captured to send the payment request

Collecting Money on UPI

Fig. 8: Flowchart of Collecting Money on UPI[2][8]

Fig. 9: Collect Money on UPI through Mobile

COMPARATIVE STUDY ON PAYTM, UPI, SBI BUDDY AND BHIM

(GOVERNMENT UNDERTAKING)[5][9][10]

Paytm
Paytm has been the go to app since demonetization stroke at midnight of November 9. This payment
wallet added five million new users and made record transactions worth of ` 120 crore every day. The

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user interface is currently available in English and ten different regional languages including Hindi,
Tamil, Telugu, Gujarati, Marathi, Bengali, Kannada, Malayalam, Oriya and Punjabi. Paytm also offers
the options of booking movie tickets, recharge mobiles and DTH, pay bills, etc. with different cash back
benefits. Paytm is approved as an operating unit for Bharat Bill Payment System, making it a secure
way to pay for various bills. Paytm charges 4 per cent for customers who have not completed their KYC
and 1 per cent for KYC compliant customers. Paytm allows us to transfer money to a mobile number or
banks as well. However, this transaction is capped at ` 25000 per month.

Fig. 10: Collect Pay Transaction Flow

SBI Buddy
State Bank of India(SBI) launched its payment app, SBI Buddy, early last year. SBI Buddy is a semi-
closed prepaid wallet which is used to transfer money to other payment wallets, bank accounts anywhere
at any time. The app also allows you to make payments at shopping malls and recharge and pay bills.
The biggest highlight for the Buddy App is that it is backed by the banking giant, government-owned,
State Bank of India. This app is also available in 13 languages: Assamese, Bengali, English, Gujarati,
Hindi, Kannada, Malayalam, Marathi, Oriya, Punjabi, Tamil, Telugu, and Urdu. The SBI Buddy App
has a monthly transaction limit of ` 20000 for Non-KYC customers and ` 100000 for KYC customers
on merchant transactions and fund transfers. The app also has a cap of ` 20000 for non-KYC customers
and ` 25000 for KYC customers for transfer to bank account.

BHIM
BHIM, the app is currently only available in Hindi and English. BHIM is not a payment wallet which
requires a prepaid payment, it essentially connects your bank accounts to make easier payments. BHIM
can be accessed through various platforms, like UPI, IFSC and MMID and unique QR code. The app is

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 Unified Payment Interface (UPI): A Cashless Indian e-Transaction Process

connected to our Adhaar, making it more secure and as it is under the government’s umbrella is can be
trusted more than the other options. The App also has a three-step security method for making payments,
assuring us of its security. A negative point for BHIM will be the low transaction cut. BHIM App currently
has a transaction limit of ` 20,000 per day and the maximum amount per transaction is kept at ` 10,000.

UPI
UPI is a system that powers multiple bank accounts into a single mobile application (of any participating
bank), merging several banking features, seamless fund routing & merchant payments into one hood.
Any UPI app can be downloaded by Smartphone users who can choose their bank as the preferred UPI
payment track. The transaction limits on UPI Apps depends on different banks for which it is made.

Table 1: UPI Analytics

Month No. of Banks live on UPI Volume Amount (` in Mn)

Aug-16 21 92,856 30.92

Sep-16 25 85,115 326.37

Oct-16 26 1,03,060 485.73

Nov-16 30 2,85,402 1,004.58

Dec-16 35 19,67,140 7,061.66

Jan-17 36 41,52,724 16,588.02

Feb-17 44 41,55,944 19,020.67

Mar-17 44 61,61,259 23,913.78

Fig. 11: Benefits of using UPI [10]

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COMPARISON BETWEEN DIFFERENT PSP UPI APPS

Table 2: Comparison between different PSP APPs[3][11][12]

Technology Vendor

Dual Sim Support

Adhaar Payment
In-App Scanner
PSP APP Name

Split Payment

Indic Support

Bill Payment
PSP Bank

Help Text
UPI Link
QR Code
Collect
Sl. No.

Pay
Allahabad
1 UPI LCode Y Y N N NA Y Y Y Y Y N
Bank
ONE - UPI
2 Andhra Bank Olive Y Y N N Y Y Y Y Y Y N
App
3 AxisPay Axis Bank Y Y N N N Y Y N N Y Y
Baroda Bank of
4 Y Y N N Y Y Y Y N Y Y
MPay Baroda
English, Hindi,
Bengali, Gujarati,
5 BHIM NPCI JusPay Y Y N Kannada, Y Y Y Y Y N N
Malayalam, Oriya,
Tamil, Telugu
English, Hindi,
Bengali, Gujarati,
6 BHIM iOS NPCI JusPay Y Y N Kannada, Y Y Y N N N N
Malayalam, Oriya,
Tamil, Telugu
UPI -
7 Canara Bank NPST Y Y N Hindi + English Y Y Y N Y Y N
empower
Central Bank Infrasoft
8 Cent UPI Y Y N N Y N N N N N N
of India Tech
9 Chillr HDFC Bank Chillr Y Y N Y Y Y Y N N N
Catholic
10 CSB-UPI LCode Y Y N N Y N Y N N N Y
Syrian Bank
DCB Bank
11 DCB Bank Olive Y Y N N Y N N N N N N
UPI App
Dena Bank
12 Dena Bank Y Y N N Y Y Y N Y N Y
E-UPI
Mobile
13 HDFC Bank Y Y N N Y N Y Y Y N Y
Banking
HSBC
14 HSBC Bank MGS Y Y N N N Y Y Y N N Y
Simply Pay
14 UPI App IDFC Bank FSS Y Y N N Y Y Y Y Y N Y
15 iMobile ICICI Bank Y Y N N Y Y Y Y N N N
Indian Infrasoft
Indian Bank Y Y Y N Y Y Y N Y N Y
16 Bank UPI Tech

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 Unified Payment Interface (UPI): A Cashless Indian e-Transaction Process

IndusPay IndusInd
17 MGS Y Y N N Y Y Y Y N N N
UPI App Bank
Kotak
18 KayPay Mahindra Olive Y Y Y N Y Y Y N Y N Y
Bank
KBL Karnataka
19 LCode Y Y N N N Y Y Y N N Y
SMARTz Bank
20 Lotza-UPI Federal Bank Y Y N N Y Y Y Y N Y Y
Bank of Infrasoft
21 Maha UPI Y Y N N NA Y Y Y N Y Y
Maharashtra Tech
22 NuPay Yes Bank NuPay Y Y N Y Y Y Y Y Y N N
OBCUPI
23 OBC Bank MGS Y Y N N Y N N N N N Y
PSP
24 PaySay Yes Bank Cheripo Y Y Y N N Y Y Y N N Y
English, Hindi,
FXMart
25 PhonePe Yes Bank Y Y Y Tamil, Marathi & Y Y Y N N N Y
(Flipkart)
Bengali
PhonePe FXMart English, Hindi,
26 Yes Bank Y Y Y Y Y Y N Y N N
iOS (Flipkart) Tamil
Punjab
27 PNB UPI National FSS Y Y N N N Y Y Y N N Y
Bank
ICICI
28 Pockets Y Y N N Y Y Y Y Y N N
Pockets
29 RBL Pay RBL Y Y N N Y Y Y Y N Y N
30 SBI Pay SBI SBI Y Y N N Y Y Y N N N N
South Indian
31 SIB M-Pay Paymate Y Y N N Y Y Y Y Y N N
Bank
32 SplitKart Yes Bank SplitKart Y Y Y N Y Y Y Y Y N N
33 Tranzapp TJSB Bank Finacus Y Y N N N Y Y N N N N
34 Uco UPI UCO Bank LCode Y Y N N Y Y Y Y N N N
35 UPI App Union Bank FSS Y Y N N Y Y N Y Y N N
36 United UPI United Bank FSS Y Y N N Y Y Y Y Y Y N
37 Vijaya UPI Vijaya Bank FSS Y Y N N Y Y N Y Y N N
Syndicate
38 Synd UPI FIS Global Y Y N N Y Y N Y Y N N
Bank
39 PayWiz IDBI Bank Y Y N N Y Y Y Y Y Y N
40 KVB Upay KVB Y Y N N Y Y Y N N Y N
Merai
41 ICICI Bank ICICI Y Y N 12 Language Y Y Y Y Y Y N
Mobile
42 LVB UPaay LVB Y Y Y N Y Y Y N N N N
Samsung
43 AXIS Bank Y Y N N Y Y N Y Y N N
Pay

FUTURE INNOVATION
™™ Aadhaar Enabled Payments System (AEPS) – This will allow users to authenticate payments

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using biometric information like fingerprint that will be verified against the Aadhaar database
and your linked bank account. This could eliminate the need to even use your smartphone for
authentication.[11][12]
™™ Aadhaar Payments Bridge (APB) – Remittances can be made to an Aadhaar number without
providing other details. This would help with direct remittances of government subsidies and
direct benefits.
™™ Micro-ATMS – Withdrawal of money without the use of a card.
™™ Bill Splitting – Bills can be split between different parties instantly.

CONCLUSION
Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile
application (of any participating bank), merging several banking features, seamless fund routing &
merchant payments into one hood. UPI is a payment system that allows money transfer between any two
bank accounts by using a smart phone. UPI allows a customer to pay directly from a bank account to
different merchants, both online and offline, without the hassle of typing credit card details, IFSC code,
or net banking/wallet passwords. The interface has been developed by National Payments Corporation
of India (NPCI). It aims to simplify and provide a single interface across all NPCI systems besides
creating interoperability and superior customer experience. The UPI seeks to make money transfers
easy, quick and hassle free. The proliferation of smart phones, the availability of an online verifiable
identity, universal access to banking and the introduction of biometric sensors in phones will proactively
encourage electronic payment systems for ushering in a less-cash society in India.

ACKNOWLEDGEMENTS
I am thankful to our colleagues Mr. Prakash Chandra Behera and Mr. Chinmaya Dash who provided
expertise that greatly assisted the research, although they may not agree with all of the interpretations
provided in this paper. I am also immensely grateful to Prof. Dr. Anil Bhumali and Dr. P.K. Paul for
their comments on an earlier version of the manuscript, although any errors are my own and should not
tarnish the reputations of these esteemed professionals.

References
1. http:// www.npci.org.in
2. https://www.icicibank.com/Personal-Banking/onlineservice/online-services/FundsTransfer/upi/index.
html
3. https:// cashlessindia.gov.in/upi.html
4. http://digidhan.mygov.in/pages/pdf/sbi/NPCI%20Unified%20Payment%20Interface.pdf
5. http://upipayments.co.in/upi-payment-system
6. https://upipayments.co.in/sbi-upi-app-download
7. https://sbiupiapp.in

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8. https://transformingindia.mygov.in/wp-content/uploads/2016/12/SBI-Pay.pdf
9. www.pradhanmantriyojana.co.in/unified-payment-interface-upi-app/
10. http://www.npci.org.in/documents/UPI_Procedural_Guidelines.pdf
11. http://www.bankofindia.com/TenderFiles/RFP%20for%20Unified%20Payment%20Interface%20
Solution.pdf
12. http://pib.nic.in/newsite/mbErel.aspx?relid=145042

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