IPASJ International Journal of Information Technology (IIJIT)

Web Site: http://www.ipasj.org/IIJIT/IIJIT.htm

A Publisher for Research Motivation ........ Email:editoriijit@ipasj.org
Volume 7, Issue 1, January 2019 ISSN 2321-5976

Unified Payment Interface (UPI): Digital

Payment System for Small Cash Society
S.T. Bhosale
Asst. Prof., VPIMSR, Sangli, Affiliated to Shivaji University, Kolhapur

Abstract
The innovation in payment system is essential for the small cash transaction because of its nature of transaction and usage.
The Unified Payment Interface (UPI) is one of the innovative method adopted and popular method for small payments. It
provides a payment architecture that is directly linked to achieving goals of universal electronic payments for less cash society,
and financial inclusion, using the latest technology trends, laid down in the RBI payment System. Present paper is based on
studying the working, architecture, usage and advantages of UPI apps.
Keywords: financial inclusion,payment, technology trends,UPI.

1. INTRODUCTION
Systemically Important Finance Market Infrastructure (SIFMI) is one of the multilateral systemused for the purpose of
clearing, settling or recording payments, securities, derivatives or other financial transactions. SIFMI includes Real
Time Gross Settlement (RTGS), Collateralized Borrowing and Lending Obligation (CBLO), Government Securities
(G-Sec). Unified Payments Interface (UPI) is a system that uses multiple bank accounts into a single mobile application
having several banking features, fund routing and merchant payments under one roof. It is a peer to peer type
transaction which collect requests can be scheduled and paid as per requirement and convenience.
UPI is a payment architecture with a set of standard app Application Program Interface (APIs) by the Reserve Bank of
India (RBI) in order to facilitate the next generation online immediate payments leveraging trends like increased
smartphone adoption, increased app downloads and universal access to data and internet.

2. Objectives
1. To study the concept of UPI
2. To understand working of UPI
3. To analyze usage of UPI in banks and its advantages.

3. Working of UPI:
An user having smartphone with savings or current account with a UPIs partnered bank can download the android app
to make Peer-to-peer (P2P) and Peer-to-merchant (P2M) payments with the use of virtual payment address(VPA).
Therefore to perform transaction through UPI user required- UIP app, MPIN, VPA, partnered UPI service bank.

4. Architecture of UPI

UPI allowing USSD, smartphone, Internet banking, and other channels integrated on common layer. This layer uses
existing systems such as PABS NACH, IMPS, AEPS, RuPayEcom, NFS etc. to arrange these transactions and ensure
settlement across accounts. Existing systems ensure reliability of payment transactions across various channels and also
takes full advantages of all the investments so far. UPI offers all payment using personal mobile phone. Central
repository able to store all detail information of payer and payee.

Volume 7, Issue 1, January 2019 Page 1

 IPASJ International Journal of Information Technology (IIJIT)
Web Site: http://www.ipasj.org/IIJIT/IIJIT.htm
A Publisher for Research Motivation ........ Email:editoriijit@ipasj.org
Volume 7, Issue 1, January 2019 ISSN 2321-5976

Figure1 Diagram showing architecture of UPI app

(Source: https://www.mpf.org.in/docs/09/NPCI%20Unified%20Payment%20Interface.pdf)
Following diagram shows the working of UPI application-

Figure 2 Diagram showing working of UPI

(Source: https://www.slideshare.net/indiastack/upi-technology)
5. Payment process:
1. Payer and payee account and institution details for routing and authorization
2. Authentication credentials(password, PIN, biometrics, etc. as required for debit, can be bank provided)
3. Transaction amount
Volume 7, Issue 1, January 2019 Page 2
 IPASJ International Journal of Information Technology (IIJIT)
Web Site: http://www.ipasj.org/IIJIT/IIJIT.htm
A Publisher for Research Motivation ........ Email:editoriijit@ipasj.org
Volume 7, Issue 1, January 2019 ISSN 2321-5976

4. Transaction reference
5. Timestamp
6. Location, product code, mobile number, device details etc. as required are other attributes.
7. Banks adopted UPI applications and transaction from Jan. 2018 to Dec. 2018

6. Usage of UPI in Banks:

Table 6.1: Usage and transaction using UPI by different banks

No. of Banks
Month Volume (in Mn) Volume change (in Mn)
live on UPI
----
18-Jan 71 151.833
-
18-Feb 86 171.4 19.56
18-Mar 91 178.05 6.65
18-May 101 189.48 11.43
18-Apr 97 190.08 0.6
18-Jul 114 235.65 45.57
18-Jun 110 246.37 10.72
18-Aug 114 312.02 65.65
18-Sep 122 405.87 93.85
18-Oct 128 482.36 76.49
18-Nov 128 524.94 42.58
18-Dec 129 620.17 95.23

Figure 3 Usage and transaction using UPI by different banks

Volume 7, Issue 1, January 2019 Page 3

 IPASJ International Journal of Information Technology (IIJIT)
Web Site: http://www.ipasj.org/IIJIT/IIJIT.htm
A Publisher for Research Motivation ........ Email:editoriijit@ipasj.org
Volume 7, Issue 1, January 2019 ISSN 2321-5976

(Source: https://www.npci.org.in/product-statistics/upi-product-statistics)
Above table shows the growth of UPI by different banks and banking transactions. From the above table it is seen that
the usage of transaction increases continuously i.e. in month of Feb-18 transaction amount is 19.27 million whereas in
month of Dec-18 transaction amount is 95.23. Therefore it is seen that, transaction is increasing using UPI because of
its easy usage, convenience, security, availability of services.

7. Advantages of UPI
1. Eliminates entering card details like card number, CVV code, expiry date and OTP.
2. UPI is a completely inter-operable across all payment system enabling one click two factor authentication.
3. It is high volume, low cost payment for billers which may adopt in order to offer simpler offering to the
customers
4. It eliminates total cost of PoS machine installation, maintenance, rent etc. at the place of business.
5. More audience can be served by offering a collect feature in tern improving the entry barrier for smaller
business and startups.
6. As UPI is mobile payment space which bring all the key stake holders including merchant, consumer and banks
or financial institutions on a common platform. [2]

8. Conclusion
Unified payment interface is one of the popular appon mobile phones for small cash payment society. It boost an
economy where the number of mobile wallet players and ecommerce sites are increasing. In future there will be wide
scope for UPI transactions because of its simplicity, openness, convenience, security to migrate towards a cashless and
digitized economy.
References:
[1] Katre, H., What is UPI and How It Will Benefit Your Business, www.profitbooks.net/upi-unified-payment-
interface
[2] Ratan P. Watal, Principal Adviser, NITI Aayog and Member Secretary to EAC-PM.
Digital Payments - Trends, Issues and Opportunities
[3] https://www.consultantsreview.com/cxoinsights/the-role-of-upi-in-digital-payments-vid-888.html
[4] Lele A., Unified Payment Interface app, www.business-standard.com
[5] Margaret R., whatis.techtarget.com
[6] www.npci.org
[7] www.rbi.org.in

AUTHOR
S.T. Bhosale is MCA, M.Phil. Ph.D., MBA. Presently working as Assistant Professor at VPIMSR,
Sangli. Total 17 years teaching experience at UG and PG level. Published more than 25 research
papers in various reputed journal and resented in National and International Journals. Having RG
Score 0.88, h-index-3. Working as reviewer for journal BJIT

Volume 7, Issue 1, January 2019 Page 4