Retail payment: Faster and easier with UPI- here’s how

It facilitates a ‘virtual address’ as the payment identifier for sending and collecting money and works on a single click two-factor authentication. It also provides an option for scheduling push and pull transactions for various purposes like sharing bills among peers.

Customers can use UPI app instead of paying cash on delivery on receipt of product from online shopping websites. They can use UPI for expenses like paying utility bills, over the counter payments, barcode (scan and pay) based payments, donations, school fees and other such unique and innovative use cases. They just need to register with UPI service of a bank (Payment Service provider).

UPI will offer a facility to identify a bank customer with an email-like virtual address. It will allow a customer to have multiple virtual addresses for multiple accounts in various banks. In order to ensure privacy of customer’s data, there is no account number mapper anywhere other than the customer’s own bank. This allows the customer to freely share the financial address with others. A customer can also decide to use the mobile number as the name.

How does it work?

When customer XYZ initiates e-commerce purchase of shirts online using only his virtual ID after selecting UPI as the payment mode, a pop-up/push notification is received on his Payment Service provider (PSP) app requesting for a confirmation of the payment. He simply enters his secure pin to authenticate the purchase transaction and within seconds receives a confirmation of a successful online purchase from the merchant. XYZ had created his virtual ID/ address as part of the registration process with the PSP.

XYZ reaches the payment section on the merchant site post adding goods to his shopping cart and selects UPI as the payment mode. He is only required to enter his virtual ID to proceed and nothing else. When the transaction request hit merchant’s server, it is immediately passed on to the acquiring bank’s server where a UPI Collect transaction is initiated on the virtual ID shared by XYZ from the merchant’s server.

This request is then routed to UPI server and using XYZ’s virtual ID the transaction request is directed towards his PSP app. A pop-up appears on the app screen requesting for the secured pin. He authenticates the transaction request and the transaction proceeds to the UPI system where the actual account details are fetched up against the mapped virtual ID.

This transaction is then pushed to XYZ’s bank account, where the credentials are validated and his account is debited. The confirmation is again pushed back to UPI servers and in turn it initiates a credit message to the merchant’s acquiring bank and the credit to the merchant happens in real time.

IN A NUTSHELL

* Register with a Payment Service provider (PSP)

* Single click 2-factor authentication for transactions

* Cash payment, use of debit, credit cards, internet banking etc. not
involved

* ‘Virtual address’ as a payment identifier for sending to and collecting
money from

* Best answer to cash on delivery hassle, running to nearest ATM or
rendering exact amount

* Merchant payment with single app or In-App payments

* Schedule, PUSH and PULL payments for various purposes

* Utility bill payments, over the counter payments, barcode (scan and pay)
based payments

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