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- Raghuram Rajan has just turned your smartphone into a bank, here is how you can use it
Smartphones are not just useful for social media, videos and taking selfies. They will now become an important part of your daily life by doubling up as a portal for making payments, sending and receiving money etc.
Ten of the country's biggest banks along with the Reserve Bank of India have just launched a Unified Payments Interface (UPI) — a mega app that will sit on your smart phone once you have downloaded it and dramatically reduce the cost and time taken for making simple payments. What's more, you can use this app to pay for any transaction below Rs 1 lakh, even something as low as Rs 50.
The biggest impact of this app will be on third-party payments. Today, if you want to pay someone, you need to add him or her as a beneficiary. You need the IFSC code and bank account number and branch etc. The UPI app does away with all this. All you need is the receiver's unique ID. Open the UPI app, select the amount to be paid, add the unique ID of the beneficiary and select 'send'. The app will ask for a mobile pin to authenticate the payment after which it is done.
This can be useful not just in making regular payments but also in transactions between friends. You have just had a drink at the bar and want to share the bill. One person pays and the others just transfer the money to his account. No need to use cash, no need for the IFSC code and all that.
Remittances will also become easier and the same process applies here as well. Cash on delivery, the big driver behind the ecommerce boom, will probably die a natural death for people with smartphones. They can use the UPI app to pay after receiving the goods. All they need to know is the unique ID of the ecommerce firm. The buyer can also scan a QR code that the delivery boy carries through his UPI app or pay directly to the unique ID of the delivery boy.
How can a customer use UPI
1. He will need to have a bank account and a smart phone.
2. Download the UPI app of a bank from PlayStore
3. Connect the bank account
4. Create a Unique ID
5. Generate a mobile pin
6. Also link Aadhaar number
Only 10 banks are part of this now but others are expected to join. Another big feature of UPI is that you can use any bank's systems to transfer money or make payments. You don't need an account with that specific bank to be able to use its UPI app. All you need to do is to download that bank's UPI app, register yourself and make the payment.
- How the unified payment interface will change mobile payments
The payments interface is expected to bring about a significant shift in the way mobile banking transactions are conducted
Mumbai: The National Payments Corp. of India Ltd’s (NPCI) most ambitious project, unified payments interface (UPI) system, will go live on Monday. The payments interface is expected to bring about a significant shift in the way mobile banking transactions are conducted.
Mobile banking has surged in India in recent months as banks have pushed both retail and corporate customers to adopt platforms designed to transact on the phone. In the September-December quarter, the value of mobile banking transactions surged 82% over the same period last year.
The launch of UPI could quicken its growth further. Here’s how:
1. Reduce need for e-wallets:
UPI is set to allow you to make payments using your mobile phone as the primary device without the need for you to download an app to send or receive money.
Hence, you may no longer need an e-wallet if convenience is your primary focus for using the product. Also, you will be able to use multiple e-wallets seamlessly as they will become inter-operable with UPI.
2. No need to disclose identity while making payments:
Sample this. If you want to settle your bill with the cab driver at the end of the journey, you just have to give your virtual address and the driver will request money from it. Sure, the system will check with you.
You will get a message on your mobile phone asking for authentication.
Once you authenticate the transaction by entering your password, it will be complete. This process doesn’t require you to share bank details with either the driver or the cab service provider. Also, since UPI runs on Immediate Payment Service (IMPS) platform, the service will be available real-time and 24x7.
3. Use any bank product:
UPI will make the payment system inter-operable. Hence, you will be able to use the products of any bank, even if you are not a customer, which has entered into an agreement to use the UPI platform.
4. One-click, two-factor authentication:
And finally, UPI enables a two-factor authentication in one click. So far, for a two-factor authentication, you have to click multiple times. With UPI, you will be able to do it at one click. This system will allow for a one-click, two-factor authentication on mobile phones across bank accounts.
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