UPI - Virtual Payment Address
In the year 2016, The National Payments Corporation of India launched UPI or Unified Payments Interface. This is a payment system that allows users to transfer funds between bank accounts using their smartphones through a UPI mobile application. It is one of the most common payment methods used today, making it easier and faster to make transactions.
The VPA or a Virtual Payment Address is a unique financial ID that is provided to each user. You can send and receive funds into your bank account directly using just the VPA. There is no need to remember bank account details or IFSC codes like you need to with traditional funds transfer methods such as NEFT or RTGS.
How to Create VPA
To make use of any UPI app, you need to create a VPA. You can get your VPA through your bank directly if the bank is UPI enabled. For UPI apps of banks, you need to download the app on the smartphone, which uses your phone number registered with the bank. There are also independent UPI applications such as PayTM and Google Pay that can be used to create a VPA. Download the UPI application that you wish to use and follow these steps to create your VPA:
Provide the details of the bank account that you want to link to your VPA.
Choose the option “Create VPA.”
Users can provide their name, phone number or any other option that is easy to remember as their VPA. Most apps let you set your preferred VPA while others will give you a few options to choose from. The VPA looks similar to an email ID. For instance, if you create a VPA address for Canara Bank, your VPA will be <your name/ phone number>@canarabank.
Once the availability of the VPA is confirmed, you can use it for your financial transactions.
The next step is to create a UPI PIN which is a unique 4-6 digit number. This is used to authorize your transactions through the UPI app.
Now, you are ready to use the VPA to send or receive money.
How to Use the VPA
You can have a single VPA linked to multiple bank accounts or an individual VPA for each bank account.
Sending money using VPA
To send funds using a UPI app, you can choose the “Pay with VPA” option. Then, enter the VPA of the third party that you wish to send money to. Select the bank account you would like to use for the transaction. Enter the UPI PIN and authenticate the transaction to complete the transfer.
Benefits of UPI
UPI apps have become the most common mode of payment. There are several advantages of using these apps:
● Zero transaction fees: The costs involved with UPI transfers are so low that banks and apps are offering them for free to customers.
● Easy transactions with merchants: UPI transactions are feasible even for small businesses. Therefore, these apps can be used for small transactions as well. This avoids dealing with cash and reduces trips to the ATM.
● Hassle-free: With UPI transactions, you do not have to remember bank account details, IFSC codes or any other details. All you need is the VPA or the QR code to make transfers instantly.
● Security: Using UPI apps does not require you to provide your bank details or card details when you are making a transaction. Thus, your details remain secure. In addition to this, all the applications are regulated by the Reserve Bank of India.
● You can make transactions anytime: You can make use of a single device to access all your accounts. This allows transactions on the go. UPI transactions take place even on public holidays. The app can be used 24 x7, and the funds are transferred instantly.
● You can receive funds: It is also possible to get payments from customers and clients or form any third party account. You can request payment and have the funds transferred to your bank account directly.
● Rewards and cashbacks: UPI apps provide cashbacks for making utility bill payments and bank transfers. These reward points and cashbacks can be redeemed against future transactions. This helps you save money.
● Easy E-commerce transactions- Most e-commerce portals allow you to make payments using UPI apps. This means that you do not have to enter your credit or debit card details or bank details. This is the safest and most hassle-free option to make transactions online.
Limitations on UPI Transfer
There are some limitations that you need to take into consideration when using UPI apps:
● You can only make transfers to accounts that are linked to a VPA.
● UPI apps do not function optimally if there are any issues with your smartphone.
● There are limitations on the maximum amount that you can transfer each day. UPI is an IMPS linked application which allows you to transfer up to only Rs.1 Lakh per day.
● The transaction limit per transaction varies from one bank to another. This ranges between Rs.10000 and Rs.1 Lakh.
● In most UPI apps, the maximum number of transactions per day is limited to 20.
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