Enabling Convenience And Security With UPI Payments
Read in: 4mins, Published On , 30 Sep 2020
Enabling Convenience And Security With UPI Payments
Bit by bit, your smartphone is doing the job of many things you usually carry in your pocket. Remember when you had to carry cash or bunch of credit or debit cards in your wallet? Today, all you need is your smartphone. Unified Payment Interface or UPI is a new Indiacentric revolution. You can now use UPI payments even for investments.
WHAT IS UNIFIED PAYMENTS INTERFACE (UPI)
It is an instant real-time payment system developed by National Payments Corporation of India (NPCI) facilitating inter-bank transactions. The interface is regulated by the Reserve Bank of India and works by instantly transferring funds between two bank accounts on a mobile platform.
WHY UPI MAKES GOOD SENSE
onsider the UPI like an email ID for your money. It is a simple yet unique identifier that your bank uses to transfer funds and make payments through the Immediate Payments Service [IMPS]. This means, you no longer need to type in your account details, remember your Net Banking credentials or any other financial information.
Regardless of whether you are a new investor or an existing investor in Mutual Funds, all you need is to be KYC-compliant and have the UPI application downloaded on your registered mobile phone.
NOTABLE ASPECTS
Linked exclusively to your registered mobile number
Single interface that offers instant transaction
Allows you to invest money from your smartphone
No need of digital wallets, bank account details or Net banking credentials information
Simplified and frictionless payment system
Robust security with its twofactor authentication, mobile number verification and more
HOW YOUR UPI WORKS
Existing and new investors are eligible to invest using the UPI payment system. Just link your registered mobile number with your bank account to generate a Virtual Payment Address (VPA) in the UPI application with your name or mobile number. Through this VPA which is similar to that of an email ID, you can invest seamlessly.
FOR MUTUAL FUND INVESTMENTS:
Investing through the UPI requires you to choose UPI as the payment mode on the website of the Mutual Fund or the AMC’s platform that supports the UPI interface.
Provide your UPI Virtual Payment ID. (This UPI VPA need to be mapped to the Bank Account registered in your Folio)
Receive a notification on your mobile phone from the UPI app
Verify your transaction details.
Authorise your Mutual Fund investment through the UPI PIN
The amount is instantly debited from your bank account and transferred to the Fund House
With UPI, you get to enjoy the instant fund transfer experience of UPI when subscribing for an IPO as well.
FOR IPO INVESTMENTS:
When applying for an IPO through the UPI app, fill in your bid details in the IPO application form and state your UPI ID where indicated.
Submit the filled form to your depository participant or the registered intermediary
Your bid details are uploaded on the bidding platform (Stock Exchange)
Your bid details are shared with your UPI ID to the escrow/sponsor bank
A request for blocking of the funds equivalent to the number of shares you have applied(Application Supported by Blocked Amount or ASBA) for is received on your registered mobile number
Once this request is validated by you, the amount is blocked in your bank account
The amount is only debited from your account in case of full or partial allotment of shares and the nonallotted amount is released in your bank account
Post debit, the shares are credited to your Demat account
LIMITATIONS OF UPI
NPCI had initially kept the UPI payment limit up to `1 lakh. This has been increased to, Rs. 2 lakhs effective from 1st April 2020. However, you need to check with your bank regarding this upper limit before you invest through the UPI payment mode as each bank have set their own payment limits. If you use a VPA of Bank account which is not registered in your Folio, then the UPI payment does not get processed due to Third Party clause of SEBI.
TAKEAWAY
Consider UPI payments as a revolution in banking. It is a sophisticated public payment infrastructure that has transformed how you handle payments.
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