The Unified Payments Interface is a real-time payment system. It is designed to enable peer-to-peer inter-bank transfers through a single two-click factor authentication process. The interface is regulated by the Reserve Bank of India (RBI), India’s central bank. It works by transferring money between two bank accounts along with a mobile platform.2

The system is said to be a safe and secure method of transferring money between two parties and eliminates the need to transact with physical cash or through a bank. The pilot system was launched in India on April 11, 2016. Banks across the country started to upload their interface in Aug. 2016.1

UPI uses existing systems, such as Immediate Payment Service (IMPS) and Aadhaar Enabled Payment System (AEPS), to ensure seamless settlement across accounts. It facilitates push (pay) and pull (receive) transactions and even works for over-the-counter or barcode payments, as well as for multiple recurring payments such as utility bills, school fees, and other subscriptions.

Once a single identifier is established, the system allows mobile payments to be delivered without the use of credit or debit cards, net banking, or any need to enter account details. This would not just ensure greater safety of sensitive information, but connect people who have bank accounts via smartphones to carry out hassle-free transactions.

Overall, UPI implies fewer cash transactions and potentially reduces the unbanked population.