UPI (Unified Payments Interface): Full Form, Meaning, How to Create, Find & Use UPI IDs
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11 JANUARY, 2024

Financial transactions have evolved, becoming more streamlined and efficient. One such innovation that has transformed the banking landscape in India is the Unified Payments Interface, commonly known as UPI. Primarily designed to facilitate seamless money transfers, UPI has become a game-changer, especially for current account holders. But what exactly is UPI for existing account holders, and how does one navigate its intricacies? Let’s delve in.

What is UPI?

Unified Payments Interface, or UPI, represents a real-time payment system allowing instant money transfer between mobile banks. At its core is the UPI ID, a unique address that banks use to identify users on the UPI platform, making sending and receiving money easier and more secure without sharing additional bank details.

Features and Benefits of UPI

1. Unified Platform: UPI is a one-stop solution for various payments, covering peer-to-peer transfers, merchant payments, and bills. Users can avoid the hassle of managing multiple apps.

2. 24/7 Accessibility: UPI operates round the clock, allowing users to make payments anytime, even on weekends and holidays. This enhances convenience by eliminating restrictions based on banking hours.

3. Security Assurance: UPI prioritises security with a two-factor authentication process, ensuring only authorised individuals can access and initiate transactions.

4. End-to-end Encryption: UPI transactions are safeguarded by end-to-end encryption, providing a robust layer of protection against unauthorised interception or tampering with transaction data.

How does UPI work?

Users must link their bank account to a UPI-enabled mobile app when they want to pay through UPI. Once the account is connected, the user can create a unique UPI ID used as an identifier for receiving payments. To make a payment, the user must enter the recipient's UPI ID or mobile number and the amount. The transaction is then authorised using a PIN or biometric authentication on the user's mobile device. The funds are instantly transferred from the user's bank account to the recipient's.

How many Participants are involved in the UPI transaction?

When it comes to a UPI transaction, several participants are involved in the process.

  1. Remitter Bank: Initiates the UPI transaction on the payer's behalf, marking the process's first step.
  2. Beneficiary Bank: Ensures the payment reaches the correct account, which is pivotal in crediting funds to the beneficiary.
  3. NPCI: The National Payments Corporation of India oversees and governs the UPI system, serving as an intermediary between banks for seamless fund transfers.
  4. Merchants: Businesses or individuals accepting UPI payments, such as online platforms, retail stores, or service providers, contribute significantly to UPI transactions.
  5. Bank Account Holder: Individuals or entities holding a bank account and utilising UPI for payments, either initiating or receiving funds within the UPI system.
  6. PSPs: Payment service providers acting as third-party platforms facilitating user-friendly UPI transactions. PSPs serve as intermediaries, simplifying the process for users while connecting with banks.

Multiple participants are involved in a UPI transaction, including remitter and beneficiary banks, NPCI, merchants, bank account holders, and PSPs. Each participant plays a crucial role in ensuring smooth and secure payment through UPI, making it a convenient and efficient payment method for users.

How to Send Money Through UPI- Step-by-Step Process

To send money through UPI, you must first ensure that you have a UPI-enabled bank account linked to your mobile number. Most banks offer this feature so you can check with your bank for clarification. Once you have confirmed that your bank account is UPI-enabled, you can proceed with the following steps.

1. Download a UPI-enabled app: Choose from apps like Google Pay, PhonePe, Paytm, or BHIM on Google Play or Apple App Store. Install the chosen app on your smartphone.

2.Set up your UPI ID: Open the installed app and follow the on-screen instructions to create your UPI ID. This unique identifier links to your bank account for transactions.

3.Add your bank account: Post-UPI ID setup, add your bank account details. Input your account number and IFSC code, and verify using the OTP sent to your registered mobile number.

4.Choose the recipient: Choose the recipient from your contacts or manually input their UPI ID or bank account details.

5. Enter the amount and remarks: Specify the amount to send and, optionally, include remarks for tracking or personalisation.

6.Authenticate the transaction: Review transaction details and authenticate using your UPI PIN or the app's authentication method. Once confirmed, the money instantly transfers from your account to the recipient's.


What is a UPI PIN?

A UPI PIN is a 4 or 6-digit code users set during UPI application registration. This confidential PIN confirms transactions and should never be shared to prevent fraud.

How to Generate a UPI PIN?

Follow these steps to generate a UPI PIN:

  1. Install a UPI-enabled app and create a UPI profile.
  2. Open the app and tap 'Profile' in the top left corner.
  3. In 'Payment Settings,' choose 'UPI & Linked Bank Accounts.'
  4. Select a linked bank without a set UPI PIN.
  5. Click 'Set PIN' and enter the last 6 card digits and expiry date.
  6. Receive an OTP and enter it with your preferred UPI PIN.
  7. Click 'Submit' to set your UPI PIN. A confirmation notification will follow.

Note – Steps may differ from platform to platform.

How to Create your UPI ID at kotak Bank?

How to Find Your UPI ID?

Let’s see the steps to help you find your UPI ID.

  1. Open the app and go to your profile settings.
  2. Look for 'Bank accounts,' ‘Profile,’ or a similar option.
  3. Select the specific bank account.
  4. Find your UPI ID under 'UPI IDs' or a similar section.

These steps apply universally across different UPI apps.

What is a UPI Reference Number?

Every UPI transaction generates a 12-digit unique UPI reference number, typically displayed below the transferred amount. This reference number is a tracking identifier, enabling users to monitor and trace their transactions.

Read Also: What is EBITDA

FAQ’s About UPI

1. What is UPI's full form?

The full form of UPI is the Unified Payments Interface. UPI is an instant real-time payment system facilitating immediate cash transfers between two bank accounts through a mobile interface.

2. Are there any charges for UPI?

UPI payments for personal transactions are free of extra charges. However, digital wallet transactions above Rs 2,000 may have associated costs.

3. Is UPI safe?

UPI payments are highly secure and regulated by the Reserve Bank of India and NPCI. Mobile payment apps strictly adhere to the guidelines set by these regulators, ensuring the safety and reliability of UPI transactions.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.