A PROJECT REPORT ON

“GROWTH OF UPI AMONG YOUTH IN INDIA”

A PROJECT SUBMITTED TO THE
UNIVERSITY OF MUMBAI

For partial completion of the degree of

Bachelor of Commerce (Accounting and Finance)
Under the faculty of Commerce
By
Miss. Drashti Bhatt

Class: TYBAF Roll No: C20212406

UNDER THE SUPERVISION OF

Mr. Darshan Joshi

SASMIRA’S INSTITUTE OF COMMERCE AND SCIENCE

SASMIRA MARG, WORLI, MUMBAI-400030
ACADEMIC YEAR 2023-2024

1
 A PROJECT REPORT ON

“GROWTH OF UPI AMONG YOUTH IN INDIA”

A PROJECT SUBMITTED TO THE
UNIVERSITY OF MUMBAI

For partial completion of the degree of

Bachelor of Commerce (Accounting and Finance)
Under the faculty of Commerce
By
Miss. Drashti Bhatt

Class: TYBAF Roll No: C20212406

UNDER THE SUPERVISION OF

Mr. Darshan Joshi

SASMIRA’S INSTITUTE OF COMMERCE AND SCIENCE

SASMIRA MARG, WORLI, MUMBAI-400030
ACADEMIC YEAR 2023-2024

2
 DECLARATION

I the undersigned Miss. Drashti Bhatt here by, declare that the work embodied in this project
work titled “GROWTH OF UPI AMONG YOUTH IN INDIA” forms my own contribution
to the research work carried out under the guidance of Miss. Drashti Bhatt is a result of my own
research work and has not been previously submitted to any other University for any other
Degree / Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly indicated as
such and included in the bibliography.
I, here by further declare that all information of this document has been obtained and presented
in accordance with academic rules and ethical conduct.

Miss. Drashti Bhatt

Certified by
Mr. Darshan Joshi
(Project Guide)

3
 CERTIFICATE

This is to certify that Miss. Drashti Bhatt has worked and duly completed his project work for
the Degree of Bachelor of Commerce (Accounting And Finance) under the faculty of Commerce
in the subject of Accounting And Finance and her project is entitled “GROWTH OF UPI
AMONG YOUTH IN INDIA” under my supervision.

I further certify that my entire work has been done by the learner under my guidance and that no
part of it has been submitted previously for any degree or diploma of any University.
It is her own work and facts reported by his personal findings and investigations.

Principal Project Guide

Dr. Ashish Chutke Mr. Darshan Joshi

Internal Examiner External Examiner

Date-

Place-

4
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my Principal, Dr. Ashish Chutke for providing the necessary facilities
required for completion of this project.

I take this opportunity to thank our HOD, for his moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Mr. Darshan Joshi
whose guidance and care made the project successful.

I would like to thank my College Library, for having provided reference books and magazines
related to my project.

Lastly, I would like to thank each and every person who directly and indirectly helped me in the
completion of the project especially my Parents and Peers who supported me throughout my
project.

5
 EXCECUTIVE SUMMARY

A client can link multiple bank accounts to the UPI app, such as the BHIM app. ‘STUDY OF
UPI PAYMENT SYSTEM. United payment interface’ is a system for interbank transfers that
allows sending and requesting money. It is developed by the National Payments Corporation of
India (NPCI) and (regulated by the Reserve Bank Of India. BHIM-UPI app is built over the
immediate Payment service UMPS).
Infrastructure and allows the user to instantly transfer money between bank accounts of any two
parties. Multiple bank accounts of clients can be linked to the UPI app. BHIM app allows users
to send or receive money to or from UPI Payment addresses, or to non-UPI based accounts (by
scanning a QR code with the accounts number and IFSC Code or MMID (Mobile Money
Identier)code.
Banks that are sited with the UPI application by NPCI are termed as payment services, provides
(PSP), PSP is a term that refers to those banks which have their own mobile application to
facilitate transactions. Issuers are those banks that don’t have their payments interface and reply
on third-party software for transactions using UPI. In this paper, an attempt is made to identify
the level of awareness among people about the united payment interface and on what basis they
select the model of dig payment. This research work was done to identify the adoption of UPI
money transfer system. Both primary and secondary data have been used in this paper to make
full utilization in order to accomplish the objective.

6
 INDEX

CHAPTER INDEX TITLE PAGE.

NO
NO.

1. Introduction 1-52

2. Research Methodology 53-54

3. Literature Review 55-58

4. Source of data 59-65

5. Recommendation 66

6. Suggestions 67

7. Conclusion 68-69

8. References 70

9. Webliography 71

10. Bibliography 72

Questionnaire 73-75

7
 INTRODUCTION OF UPI PAYMENT

1.1 INTRODUCTION

Unified Payments Interface (UPI) is a technology that connects several bank accounts into a
single mobile app of any participating bank, combining many bank functionalities, fund routing,
and merchant payments into one umbrella. It also fulfils the need for peer-to-peer requests that
can be planned and paid for. On April 11th, 2016, NPCI held a test launch with 21 member
banks. Since August 25, 2016, banks have been uploading their UPI-enabled apps to the Google
Play store. People across India are increasingly using the Unified Payment Interface (UPI)
application. After the demonetization period, UPI Payment apps grew rapidly. This is a
technologically enabled payment system that allows money to be transferred from one bank
account to another in a matter of seconds. Any UPI client app can be used, and a single app can
be linked to several bank accounts. To send or request money, many payment methods such as
Virtual Payment Address, Mobile Number, Account Number & IFSC, AADHAR, and OR Code
can be used. Simplicity, Innovation, Adoption, Security, and Cost are the main drivers of UPI .

In December 2016, NPCI (National Payments Corporation of India) launched BHIM (Bharath
Interface for Money), an application based on the Unified Payment Interface (UPI), to meet the
growing demand for online payments. Mr. Narendra Modi, Prime Minister of India, has
advocated for the implementation of cashless transactions as part of government reforms. In the
last two years, the use of various forms of digital payment has shifted dramatically. Indian
government and private sector businesses such as Paytm, Google Pay, Phone Pe, Free charge,
and Mobikwik had been aggressively pushing multiple digital payment apps, including the
BHIM app, UPI app, and Aadhaar Payment app, for its adoption across the various parts of the
nation. The development of digital transfer apps has resulted in a significant shift in public
behaviour. This has made money transfer easier in remote areas that were previously unaffected.
Because of India's huge potential for growth, the digital payment business has drawn a lot of
foreign investors.
Unified Payments Interface (UPI) is an instant real-time payment system developed by National
Payments Corporation of India 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. Over the ten years, India has made little slow but steady progress in E-
Payments. Till now many methods are invented in E Payments to digitalize the current Banking
system. So UPI (Unified payment Interface) is one of them. India is large scale country and so
many are unbanked or don't know how to avail the banking services which are easy and secure.
8
But due less literacy rate and unknown factor led people, not to use or facing difficulties in using
Banking services. So we needed to overcome these difficulties and to make payment process
easy.

Some of the challenges currently India facing in E Banking sector are According to the data
provided by RBI, number of E payments or non-cash. transactions stands to 6 per person per
year

About 1 crore plus stores have card acceptance infrastructure but currently 6 lakh stores using
this facility

To make E Banking sector more easy, convenient, secure Government started NPCI (National
Payments Corporation of India) in 2009, which controls all E Payments in India and it is setup
with guidance and support of Reserve bank of India (RBI) and Indian bank association (IBA).
After the starting NPCI, it has taken many steps to simply and provides single interface payment
system across all the systems. Some of the key drivers are

• Simplicity:

Paying and receiving money should easy as making calls or operating a basic mobile phone.
When you want to send money to any person, the recipient should be easily found with less
details means if you have his phone number or Aadhaar number or virtual address, then you don't
have enter multiple details like Account number, IFSC code and other details

Adoption: When you are sending money to any person, there should not be like sender should
have same mobile as receiver or vice versa. So system should be
universal. User can send their money to anyone who have Bank account with easy process.
Similarly, it should allow full interoperability between multiple identifiers such as Aadhaar
number, mobile number, and new virtual payment addresses.

Security: The main and most needed thing is the security. The end to end protection between
sender and receiver should be more. Data reading from smart phone to server should be strongly
encrypted. Similarly the process of sending money or receiving should not be complicated
because of security reason. It should be simple, convenient with all securities.

Cost-Considering the fact that about 150 million smartphone users exist today and that number
is expected to grow to 500 million in the next 5 years, solution should offer a mechanism to take
full advantage of that. Use of mobile phone as the authentication (credential capture) device, use
of virtual payment addresses, and use of 3rd party portable authentication schemes such as
Aadhaar should allow both acquiring side and issuing side cost to be driven down. This allows
banks and other payment players to focus on core business and allow half a billion phones to be
the primary payment device in conjunction with other 3rd party authentication. Reserve Bank of
India (RBI) has taken systematic steps to promote digital payments in India and created National
Payment Corporation of India (NPCI) as an umbrella organization to develop low cost retail
digital payment systems. In August 2016, NPCI launched Unified Payment Interface (UPI), a
9
next generation mobile based payment system which enables real time bank payments. UPI
leverages high teledensity in India to make mobile phone as a primary payment device for both
consumers and merchants and to universalize digital payments in the country.

The purpose of the paper is to study in detail the technology behind UPI and the value addition
that UPI brings with respect to the existing digital payment systems. UPI has witnessed rapid
growth that can be attributed to the expanding ecosystem promoted by banks and increasing
adoption by the users but primary usage for these early adopters has been to make person-to-
person remittances. For UPI to reach its full potential, it is critical to develop merchant centric
UPI payments solutions. This paper helps to decode the technical architecture, transactional
processes and security systems of UPI which can help to develop innovative business solutions.
India currently has inadequate digital payment acceptance infrastructure for merchants and
merchant centric UPI solutions have the potential to fill this gap in a cost effective manner.

UPI can be case study for both developing and developed countries to enable universal, low cost
digital payment system.

2. Background

Reserve Bank of India is the regulatory body with Payments and Settlements Systems Act (2007)
[5] being the primary legislation governing payments systems in India. Making India "less cash"
dependent and promoting digital payments has been a focus area for RBI since last decade. The
five yearly RBI Vision Documents which sets the tone and vision for achieving key objectives
in the payments ecosystem aptly sums up the priority for RBI to transform the payments
landscape in India. "To proactively encourage electronic payment systems for ushering in a less-
cash society in India and to ensure payment and settlement systems in the country are safe,
efficient, interoperable, authorised, accessible, inclusive and compliant with international
standards"

The period 2016-17 has been the pivotal period for payments landscape in India, the country
witnessed profound changes in payments ecosystem with radical policy decisions, introduction
of new age payment systems and rapid changes in user behavior. Demonetization was introduced
during this period whereby 86% [7] of the currency notes were rendered worthless overnight.
During demonetization paper money became scarce and one could witness serpentine queues in
banks and ATMs to withdraw meagre currency that was available. Business and trade almost
came to a standstill and the GDP growth rate decreased in spite of rapid introduction of new
currency notes and use of digital forms of payment. The year preceding demonetization saw the
emergence of mobile based digital wallets which witnessed rapid adoption by a large smartphone
using population. Emergence of mobile based digital wallets was largely driven by new age
private technology companies. During the same period with the clear mandate from Reserve
Bank of India to drive next generation digital payments, National Payments Corporation of India
(NPCI) set out to create a new payment system called Unified Payment Interface (UPI). Unified
Payment Interface (UPI) was formally inaugurated by then RBI Governor on 11 April 2016 [8]
and launched for public use on 25/08/2015.
Reserve Bank of India has been relentlessly working in the direction of enabling a digital
payments ecosystem in the country. In this direction, RBI under its guidance and with support
10
from Indian Banks Association (IBA) enabled the formation of National Payments Corporation
of India (NPCI) as an umbrella organization for all retail payments system in India with all
leading bank as stakeholders/shareholders [10]. NPCI was formed with the mandate to
consolidate and integrate the disparate systems with varying service levels into nation-wide
uniform and standard business process for all digital payment systems. The clear objective was
to create a uniform. and affordable payment system by leveraging technology and enable
financial inclusiveness in the country. UPI was a culmination of a series of developments by
NPCI over a period of 8 years since its inception in 2009. The first step taken by NPCI in this
direction was the standardization, simplification and implementation of National Finance Switch
(NFS) [11] for all the banks of the country. NFS set the common standard and enabled digital
interoperability between all banks in the country. NFS is now the backbone which powers the
largest domestic ATM network in the country.

The next revolutionary step for NPCI was to enable Immediate Payment System (IMPS) [12]
riding the interoperable layer of NFS. Prior to IMPS the modes for digital transactions in banks
were Real time Gross Settlement System (RTGS) and National Electronics Funds Transfer
System (NEFT). RTGS and NEFT are unsuitable for small ticket digital retail payments due
inherent limitations of these systems like high transaction limits, delayed settlement in batches
and fixed operating time hours. Thus NPCI introduced IMPS, a real time retail payment service
with round the clock. availability. IMPS is channel independent and can be accessed through
mobile phone, internet, ATM and Unstructured Supplementary Service Data (USSD) on feature
phones. IMPS provided a mobile based interoperable fund transfer service involving various
stakeholders such as banks, merchants, and telecom service providers. IMPS works on
immediate settlement where settlement takes place on at a granular transaction level with instant
transaction confirmation to both the remitter and the beneficiary.
IMPS transactions were enabled through mobile phones and can be considered the precursor to
Unified Payment Interface (UPI), since UPI transactions are settled through IMPS. In India,
mobile phone numbers are connected with bank accounts. Leveraging this connectivity Mobile
Money Identifier (MMID) was provided to mobile users holding a bank account. MMID enabled
the abstraction of the need to know the bank account details of the recipient to make a payment.
With IMPS users could make Push payments using Phone Number and MMID or Account
Number and IFSC code of the recipient or request a payment using Phone number and MMID
of the recipient. IMPS transactions grew in value from Rs. 4.3 billion in 2014 to Rs. 1622 billion
in 2016

IMPS transactions were being mainly used to transfer money using internet banking but were
not successful for retail small ticket transactions primarily for two reasons;

1) The need to know the bank details or the MMID and Phone number of the recipient.

2) There was no common interoperable platform to connect both the payers and the payees

India has been cash driven economy, primarily due to lack of infrastructure to make digital
payments. India has enough debit and credit card users which have been. steadily increasing over
the years from 304 million cards in 2012 to 910 million cards in 2017 [15] but digital payment
acceptance infrastructure is grossly inadequate. The number of POS machines installed at
11
merchant locations across India is only 2.7 million [15] (1.5 million prior to demonetization) for
a merchant base of over 20 million compared to 12.7 million POS machines in the USA [16].
The low number of POS machines in India can be attributable to the high cost of POS machines
which typically cost $120-150 per machine. This low penetration of acceptance infrastructure
(POS machines) for digital payments has made ATM machines as the focal point for dispensing
cash which is then used for transactions. An interesting data point in this regard is that value of
transactions using a debit card at ATM Machines is about Rs. 26,000 billion per annum versus
Rs. 4,140 billion at POS machines [15] i.e. consumers withdraw 6.2 times more money at ATMs
and then pay cash to the merchants to transact. This is primarily due to lack of POS machines
with Merchants. Thus, UPI was conceptualized to enable a universal, low cost digital payment
system. both for consumer to make digital payments with ease and merchants and businesses to
collect digital payments in a cost effective manner without the need for any POS machines.

UPI has been launched recently. Therefor e, the data has been collected from government and
other bodies and compared different mode of payments and their number of transactions are
collected. Information has been drawn from e-journals, articles from renowned analyst and
newspapers. Thus, the study is conceptual and descriptive type.

Common Features of UPI Systems are

Ability to use personal mobile as the primary device for all payments

Ability to use Aadhaar number, mobile number, card number, and account number in a unified
way. In addition, ability to pay and collect using "virtual payment addresses"

• Make payments only by providing an address with others without having ever provide account
details or credentials on 3rd party applications or websites

• Ability for sending collect requests to others

Ability to make payments using 1-click 2-factor authentication all using just a personal phone
without having any acquiring devices or having any physical tokens

Common Features of UPI Systems are

1. Payer and payee account details for authorization

2. Authentication credentials (password, PIN, biometrics, etc. as required for debit, can be hank
provided or 3rd party provided such as UIDAI)

3. Transaction amount

4. Transaction reference

5. Time limit
12
6. Other details such as location, product code, mobile number, device details, ete, as required
Working Mechanism of UPI

UPI can be used for sending money and receiving money, who have smart phone with internet
connection and Bank account. Figure 2 shows complete mechanism of paying and sending
through UPI.

First Step

To get started, first user has to download UPI application from Google play store or any other
3rd party sources. It is not mandatory that you should download application with respect to your
Bank, You can download any other UPI application and you can use it.

Second Step

Then by using your mobile number, Bank accounts linked to your mobile number will be
searched. Then by entering last 6 digits of Debit card, your bank will be registered with UPI
application.

Third Step

A VPA (virtual payment address) is to be created by user in next step. The VPA is the unique
address like email id and every user will get unique id and it is attached to their Bank account
and M Pin is set for Bank account. For example if you are using Phonepe application, then you
will get VPA as user Idemo@ybl, 985695826@ybl.

User can send and receive payment worth minimum Rs 1 up to Rs 100000 per day. As current
NPCI is not charging for the transactions. User will get his payment notification in format of
IMPS in Bank account statement.

Fundamentals of Unified Payment Interface (UPI)

NPCI developed Unified Payment Interface (UPI) as a common interface or a platform for all
digital payment systems in India. NPCI is the owner, network operator, service provider, and
coordinator of the UPI Network. The Unified Payment Interface enables architecture and a set
of standard Application Pro- gramming Interface (API) specifications to facilitate digital
payments using a mobile phone [17]. UPI leverages high penetration of mobile phones and
growing adoption of smartphones, data and internet to enable mobile based instant payment
system in India. UPI allows users to send or request money instantly from their bank accounts
using a mobile phone, making mobile phone a primary payment device for the masses. UPI uses
IMPS as the switching mechanism to enable instant payments and settlement between different
financial institutions. With UPI everyone with a bank account in India can create their Virtual
Payment Address (VPA or UPI ID) and start transacting using a mobile phone. This Virtual
Payment Address for e.g. abc@xyzbank becomes a person's unique payment identity and

13
abstracts the need to share bank details while transacting. UPI considerably simplifies digital
payments, instead of issuing cards to a large population which is costly and time consuming UPI
enables mobile phone a primary device for authorizing and making payments. Also a mobile
phone combined with a unique payment ID makes it a low cost payment acceptance device thus
making digital payments universal, easy and low cost.

IMPROVEMENTS IN UPI OVER EXISTING PAYMENT SYSTEMS

1) Pull Based Mobile transactions: Current digital payment systems including cards and online
payments are push based transactions i.e. transactions are initiated by the customer. There is no
mechanism for the merchant to initiate a payment request (pull) which the customer can approve
and pay. UPI enables both real time push and pull transactions using a mobile phone.

2) Interoperable User Interfaces: UPI allows payments across interfaces ie payment can be
requested on one interface and transaction can authorised on a different interface. For e.g.
Merchant can request a payment from a website which user can authenticate and pay using a
mobile phone.

3) Abstraction of Bank Details: There is no need to share any sensitive bank details. like account
number etc. to make a transaction. Users can create their unique virtual payment address which
serves as their unique identity to make or receive payments. This makes for secure payments
since user is not required to share any sensitive data on third party interfaces.

4) Safety with One Click-2 Factor Authentication: UPI enables transactions with single click-in
which the customer just needs to enter MPIN on the mobile phone to make a transaction. This is
unlike the existing payment systems where you have to enter card details, usernames, passwords,
OTPs etc. on third party devices or websites to make a transaction. In UPI the user's personal
mobile phone acts as a single device to authorize and authenticate the payment.

5) Mobile first approach: UPI is designed to embrace the smartphone using population in India
to enable low cost and universal digital payments. With UPI there is no need to create the
consumer side hardware infrastructure (cards etc.) to enable digital payments. In India, almost
every adult has a bank account and a mobile phone. UPI uses this ubiquitous relationship to
enable universal digital payments in India.
Other mobile payment systems like e-wallets work in their own silos i.e, the payer an payee need
to be on the same platform the transact. In UPI, only the payment address of the beneficiary is
required and amount is credited into the bank account. Also, to transact in e- wallets, users need
to pre-load the money into the wallet accounts which means their money remains stuck in the
wallet account till it is again redeemed back into the back accounts. While in UPI there is no
need to preload any wallet, money is directly debited from the bank account of the payer and
credited into the bank account of the payee.

Security in UPI

14
In India it is mandatory to enable two factor authentication to make any digital transaction. Two
factor authentication means one component is required to establish the bona fide identity of a
person and second component is password/ credentials known only to the user. UPI uniquely
employs one-click-two-factor authentication system whereby in a single click user is able to
authenticate both the factors of authentication. The mobile device fingerprint is used as the first
factor of authentication and to establish the bona fide identity of the user. The most critical aspect
of security is to bind the mobile number with the device at the time of profile creation of user on
PSP UPI App. This is done by sending an encrypted outward message from the bank registered
mobile number of the user. This message creates a device fingerprint of the mobile phone by
binding the mobile number with the Device ID, IMEI ID, SIM Number and PSP App ID. In case
there are any changes in the mobile fingerprint i.e. Mobile Number, Device ID, IMEI ID, SIM
Number and PSP App ID are changed, the user is required to re-authenticate the mobile device.
The second factor of authentication is 4-6 digits MPIN that the user creates and uses to
authenticate the transaction.

For data security, data has been classified into different classes of information:

1) Sensitive data: Such data is not to be stored and can only be transported in encryp format.
Sensitive data includes passwords, PIN and biometrics etc.

2) Private Data: Data such as bank account number. Private data can be stored by the PSP but
only in encrypted format.

3) Non-sensitive data: Data such as Name, transaction history i.e. amount, timestamp, response
code, location, etc. can be stored in unencrypted form.

In the current UPI architecture security is handled in following ways:

1) Identity and Account Validation: Veracity of personal identity and bank account is validated
as a first step during User Registration which is done by sending an outward SMS by the PSP
UPI App automatically without any customer intervention. This outward SMS is sent in
encrypted form from Mobile number is then authenticated by the issuer bank to ensure that it is
the registered mobile number of the user holding a valid bank account with the bank. The PSP
UPI App enables device fingerprinting through this automated outward encrypted SMS which
hard binds the Mobile number with the device. This ensures that the transactions originating
from the hardbound device are secured at the first step itself.

2) Application security: Each PSP UPI app is certified by PCI-DSS and RBI-Certin. NPCI
Utilities and Libraries are embedded in the PSP UPI app and sensitive data such as MPIN and
One Time Password (OTP) can only be input on these NPCI Utilities and Libraries. The
encrypted credentials are base 64 encoded by the common library and given back to PSP
application for subsequent transports through UPI.

3) Transaction Level Security: Transaction authorization and authentication is spilt between the
PSP UPI App and the Issuing Bank. The PSP UPI app validates the device fingerprint which is
the first factor of authentication. To authenticate each transaction user has to input 4-6 digit
15
MPIN which is authenticated by the Issuing Bank. Any transaction can only go through if the
device fingerprint and the MPIN are validated. User is fully in control to prevent any unsolicited
and malicious payment requests. The user needs to personally input the MPIN to authenticate
the transaction and initiate any debit from his bank account. 4) MPIN Security: The MPIN can
only be captured on the NPCI library ie. on NPCI interface embedded in the PSP UPI App. This
interface is invoked while entering the MPIN for an interoperable transaction. The MPIN is
communicated by NPCI to the Issuer Bank over a secure channel. Using Public Key
Infrastructure (PKI) encryption system UPI encrypts the MPIN using the Public key and the
MPIN is decrypted by the Issuing Bank using its Private key.

1.2 DEFINITION OF DIGITAL PAYMENTS

The Payment and Settlement Act, 2007 has defined Digital Payments. As per this any "electronic
funds transfer" means any transfer of funds which is initiated by a person by way of instruction,
authorization or order to a bank to debit or credit an account maintained with that bank through
electronic means and includes point of sale transfers; automated teller machine transactions
direct deposits or withdrawal of funds, transfers initiated by telephone, internet and, card
payment.
digit MPIN which is authenticated by the Issuing Bank. Any transaction can only go through if
the device fingerprint and the MPIN are validated. User is fully in control to prevent any
unsolicited and malicious payment requests. The user needs to personally input the MPIN to
authenticate the transaction and initiate any debit from his bank account.
4) MPIN Security: The MPIN can only be captured on the NPCI library ie. on NPCI interface
embedded in the PSP UPI App. This interface is invoked while entering the MPIN for an
interoperable transaction. The MPIN is communicated by NPCI to the Issuer Bank over a secure
channel. Using Public Key Infrastructure (PKI) encryption system UPI encrypts the MPIN using
the Public key and the MPIN is decrypted by the Issuing Bank using its Private key.

1.3 FEATURES OF UPI

The Unified Payments Interface (UPI) is a system that combines many banking services, smooth
fund routing, and merchant payments into a single mobile application (of any participating
hank). It also handles "Peer to Peer" collection requests, which can be scheduled and paid
according to need and convenience. UPI is unique from any other payment method. Here are
some of its features mentioned below: Security in UPI

In India it is mandatory to enable two factor authentication to make any digital transaction. Two
factor authentication means one component is required to establish the bona fide identity of a
person and second component is password/ credentials known only to the user. UPI uniquely
employs one-click-two-factor authentication system whereby in a single click user is able to
authenticate both the factors of authentication. The mobile device fingerprint is used as the first
factor of authentication and to establish the bona fide identity of the user. The most critical aspect
of security is to bind the mobile number with the device at the time of profile creation of user on
PSP UPI App. This is done by sending an encrypted outward message from the bank registered
mobile number of the user. This message creates a device fingerprint of the mobile phone by
binding the mobile number with the Device ID, IMEI ID, SIM Number and PSP App ID. In case
there are any changes in the mobile fingerprint i.e. Mobile Number, Device ID, IMEI ID, SIM

16
 Number and PSP App ID are changed, the user is required to re-authenticate the mobile device.
The second factor of authentication is 4-6 digits MPIN that the user creates and uses to
authenticate the transaction.

For data security, data has been classified into different classes of information:

 The most cost-effective method of transferring funds: minimum charge for NEFT is Rs 2.5
per transaction, while the IMPS charge is Rs 2.5 per transaction. Through the Unified Payments
Interface, UPI, on the other hand, charges merely 50 paise or less every transaction. As a result,
it has the potential to encourage small-scale non-cash transactions across India, which it is now
pursuing.

 Suitable for small transactions: If you need to pay Rs. 20 to the owner of your local grocery
store, will you use NEFT or IMPS to do so? Definitely not. For the shop owner, these transfer
choices can be costly and difficult. With UPI payments, you may choose from a variety of
mobile-based apps and make small payments with ease. If you look around, practically every
little shop or street seller has printed QR codes on display to receive UPI transfers. Simply scan
the QR code with your smartphone and make the required payment to use UPI. There's no need
to take loose change with you every time you make a minor purchase.

 Enhanced Security: People have stayed with cash payments because they couldn't trust online
transactions or card payments because they require bank account information. The UPI form of
payment, on the other hand, breaks the seal in this case. The payment via UPI does not necessitate
the use of a credit card or bank account information. This is where you enter your virtual payment
address. People's security and privacy concerns have been resolved by UPP's provision of
entirely secure transactions. Your bank account number or debit/credit card information are not
necessary. Payments can be made using a UPI Id. The VPA is straightforward and simple to
remember. By choosing UPI, you may protect yourself from the risk of fraud during digital
transactions

 Immediate Transfer: Everything about the UPI app is based on a formula that works instantly,
adding new pay for an online fund transfer takes time in the past. This period can last anything
from half an hour to 24 hours. You may rapidly add a new payee and send funds via UPI.
Furthermore, with the help of a decent data connection, which is now widely available, the
process of fund transfer takes only a few seconds.

 UPI allows: for instantaneous money transfers at any time of day or night. Non- banking hours
or days have no bearing on the transfer. Even if there is a backup payments will not be affected.
So, whether it's late at night or on a trip. you can do digital transfers with simplicity. You can
use UPI to transfer money from and bank account to another, make EMI payments, send money
to a friend, and pay merchants, among other things.

 Universally Applicable: One of the most appealing features of UPI is that it allows you to access
all of your bank accounts through a single app. One has the option of attaching many financial
accounts to a single, universal UPI-based app, obviating the need to install separate apps for each
17
 bank. Not only can you link the various bank accounts, but you can also choose to make one of
them your default payment option.

 Single Solution: Online payments have been made easier thanks to the digital wallet. The
introduction of digital wallets has made purchasing mobile recharges, rail tickets, online
shopping, and other services easier. The number of such wallets, on the other hand, is growing
by the day. Paytm, Free charge, Flipkart, and the Indian Railway Catering and Tourism
Corporation (IRCTC) all want you to keep your digital wallet. Maintaining multiple wallets is,
of course, inconvenient. This issue is also resolved by the UPI. Payments using UPI are as
straightforward as payments via wallets, tod only one app is required to make payments
anywhere. In addition, the UPI does not require payment in advance. Instead, your money is kept
in a bank account and earns interest. Digital wallets, on the other hand, do not provide us with
any benefits

 Cashless Functioning: You can now transfer a small sum to your vegetable vendor in a couple
of seconds thanks to UPI payments. Think of Paytm or BIHIM cards hanging on the local grocery
store as a replacement for the hassle of gelling accurate change Consider how much time you'll
save waiting in ATM queues. In the age of digital India, becoming cashless removes many
hassles from your life and makes everything run more smoothly.

 There is no need to register: if you want to send money via IMPS or NEFT, you must first
register the beneficiary by supplying bank account information. The beneficiary account will
then become operational after a cooling period that can be anywhere from 30 minutes to several
hours. However, there is no obligation for the registration process in the case of UPI. Simply fill
out the VPA information and make the required payment

 Variety of Apps available: A wide choice of Lit-based apps are available to pick from, and you
can then install them on your smartphone. Different apps offer different user interface, so you
can pick the one you like best based on simplicity of use and convenience.

1) UPI enables personal mobile to be used as a primary device for all payments including perion
to person, person to entity, and entity to person. Using UPI, users can seamlessly make or request
payments with ease and security to/from friends, merchants or pay their bills etc. without the
need to share banking credentials. User can consolidate multiple banking relationships using a
single UPI App which makes for good user experience for users.

2) The payments can be initiated both by sender (payer) and receiver (payee). This enables a
personal mobile to be used to "pay" someone (push) as well as "collect" from someone (pull).

1.4 ELEMENTS IN UPI PAYMENT METHOD

UPI payment method has various elements which are as follows-

18
 Quick Response (QR) Codes Every transaction has its own QR code, which allows for a
seamless payment experience. This is used efficiently by a number of retailers, both online
(ecommerce) and offline stores. QR codes are divided into two types: static and dynamic.

Static QR codes are those that are pasted on a store counter, a television commercial, or at an
event. You can make a payment directly to the merchant's bank by scanning them. Data is already
embedded in static QR codes. It is unique to a merchant and is tied to their bank account. After
scanning the code, all a customer has to do is enter the amount that needs to be paid. This is
especially useful in places like small shops, restaurants, and pharmacies, where the amount of
each transaction varies

Every time the merchant has to make a payment, a dynamic code is created. This code includes
the amount to be paid, as well as the merchant's name and bank account information. This is
becoming more common in situation such as grocery delivery, internet shopping, and food
delivery Because dynamic code rapidly closes the payment loop, it enables easy, cashless
payments, which can empower more customers and shops

It is not commonplace for sellers in Kirana shops to ask customers to display their phone screens
as evidence of payment. As a result, the tiny retailer is reliant on his customers to provide
payment verification Some establishments, perhaps larger stores, have a note taped to their
counters mistracing customers to "please wait for payment confirmation," and customers waste
valuable mi mates waiting for payment confirmation. Some states even feature a separate screen
dedicated se tracking the payment's completion. All of this is eliminated by the dynamic OR
code, which instantaneously closes the payment loop:

 Aadhaar For Payments

With the Bharat Interface for Money (BIHIM) Aadhaar Pay function, the NPCL has enabled
payment without a mobile phone to promote social and financial inclusion and to assist those
who do not own smartphones

The NPCI built the BHIM app, which is essentially a UPI app available in maniple Indian
languages, li unoffered a festive called BILIM Aadhaar Pay, which allows merchant to accept
payments using their Aadhaar number and the customer's biometric details. With this, Aadhaar
authentication can now be used to pay over the counter at any merchant or trader who uses the
BHIM Aadhaar app
To make this work:

 The merchant must have an Android phone with the BHIM Aadhaar app installed, as well as a
certified biometric scanner connected to a POS unit, Mobile phones, kiosks, mPOS, and tablets
are just some of the POS devices available.

 Both the merchant and the customer's bank accounts must be connected to their Aadhaar numbers

 Ending your Aadhaar number and placing your thumb on the fingerprint scanner is all it takes to
make a payment

19
 BHIM Aadhaar Pay transactions are now limited to INR 10,000

 Creating an UPI Account

To create UPI account, you need to follow these following steps

 You'll need two items to take advantage of UPI's cashless payments and quick money transfers:
your smartphone and a UPI-member bank account.
 Your mobile number must be included in your bank account information. As of now, the majority
of Indian banks are members. UPI was permitted by 21 banks in 2016 In 2021, thus number will
have risen to 216 banks
 The next step is to install any UPI-enabled app on your smartphone. Phone Pe, Paytm,

Google Pay, BHIM, Mobi Kwik, SBI Pay, and BOB UPI are some of the most popular UPI apps

 The programmes will prompt you to create a virtual ID once the download is complete. To make
or receive any UPI payment, you'll need that unique ID. Your bank will then email you a one-
time password (OTP) to prove that this your bank account.

 After the verification process is completed, you can create your Virtual Payment Address (VPA)

 Virtual Payment Address (VPA)

The Virtual Payment Network (VPN), which resembles an email address and is unique to you,
for example is yeast megabank. Your VPA allows you to take advantage of the enormous
potential of UPI payments and transfers

The VPA is a payment gateway that allows you to make payments from your bank account using
your phone. It's also feasible to use the same virtual payment address to link multiple bank
accounts. The VPA saves you tine by eliminating the need to put in long bank account details
for both the sender and the receiver of the payment.
Its abo safeguards your financial details. When compared to digital wallets, credit card or
Additional bank transfer, the VPA is the reason UPT is such a user-friendly platform for

1.5 HISTORY OF UPI

In March 2011, an RBI paper stated that the average number of non-cash transactions per person
was only six per year. According to the paper, just a small percentage of India's roughly 10
million businesses accepted card payments at the time. Nearly 145 million households were also
denied access to banking services, including online banking. The large disparity between those

20
who used digital payments and those who did not was concerning. especially in light of financial
issues like black money and corruption. The National Payments Copromotion of India (NPCT)
was established by the government in April 2009 with the primary goal of combining and
integrating diverse systems with varying service levels into a single, country-wide process. It's
part of the Green Initiative, which aims to reduce paper usage in the domestic payments sector.
UPI was first made available to the general public in 2016.
The NCPI was entrusted with establishing UPI to simplify digital transactions and create a single
interface that could be used accrual systems, in light of the document published by the RBI and
other contributing factors. The RBI-regulated system has grown to become one of the most
popular, if not the most popular, means of digitally exchanging money in India. UPI was one of
the first and most successful deep tech inventions in India, according to Mr Sharad Sanghvi, MD
and CEO of Net magic, an IT service and technology company in India.
In December 2019, Google suggested to the US Federal Reserve Board that Fed Now, a real-
time payment system for the United States, be developed, based on the success of
UPL According to research from ACI

Worldwide and Global Data, India overtook China and the United States as the world's largest
real-time payment market in 2020, with 2,550 crore (255 billion) yearly transactions. Under the
Interactive Voice Response project, NPCI collaborated with fintech start-up Urbana
Technologies in 2021 to build a voice-based payment service for feature phone customers in low
connection zones using the UPI payment ecosystem. For peer-to-peer (P2P) transactions, the
system will combine Dual Tone Multi-Frequency (DTMF) signalling technology with a two-
factor authentication (2FA) low. It will be in beta testing from September 2020 to June 2021,
with RBI approval for large-scale deployment pending. By October 2021, the beta testing and
pilot experiment were completed, and RBI began developing recommendations for use across
the country. According to the Economist to abolish the merchant discount rate (MDR) on UPI in
2019, the number of loves Irrumations increased, resulting in massive improvements in real-time
transaction volume stusses Many countries, including Brazil, Bahrain, Saudi Arabia, Singapore,
the United States, stud the European Union, are now attempting to replicate UPT's success in
their respective markets U77 has become a popular payment option for Initial Public Offerings
(IPOs) since January 1, 2019. In March 2020, the transaction limit was rained from 21,000,000
to 12,000,000 The limit for Retail Direct Scheme and IPO applications was raised to ₹5,00,000
by the RBE in December 2021. RBI is considering a merchant discount rate (MDR) on future
UP! transactions to make it commercially viable for payment providers.

1.6 EVOLUTION OF UPI

The Unified Payment interface (UPI) is a mobile banking platform designed by the National
Payment Corporation of India on April 11, 2016 by ex-RBI governor Raghuram Rajan. The
payment interface became well-known when the Prime Minister of India banned the 500 and
1000 nice notes. Following that, the UPS, like other mobile banking and cashless immaction
technologies, grew rapidly Later, as wallet-based mobile platforms became increasingly difficult
to use, UPI became well-known for its transaction spend and hank-to-bank transfer capabilities.
Unified Payments Interface (UPI) is a popular payment system in India these days. It was
established by the National Payments Corporation of India (NPCT), which is controlled by the

21
 Reserve Bank of India (JUBI) UPT is based entirely on the existing IMPS technology, which
allows users to instantaneously transfer payments between their bank accounts using either their
UPI Virtual Address (a unique ID provided by the bank) or their Bank Account Number and
IFSC Code
UPI had a difficult start when it first came in August 2016. Inda took its time developing faith
in UPI as a safe payment system, just as it did with any previous groundbreaking technology
disarmer UPI, on the other hand, burst like a volcano after it had secured the "nearly unreachable
faith of Indian society UPM payments were accepted in practically every shop in a couple of
months, from local general stores to fudge hypermarket chain. UPI transaction volumes increase
123 times in less than two years, from 2 million in December 2016 to 246 million in June 2018,
while transaction values increased 58 times, from INR 7 billion to INR 408 billion. According
to current figures, UPI usage has exploded to previously unimaginable levels. All of this has
been made possible by a number of clever government measures. Some of them have had a more
favourable public appeal, such as rewarding cases and merchants through schemes and demands
, while then, such as demonisation, have had to resist the public's abrasive reactions. All of these
policies, in one way or another, have aided UPIS huge development and rapid adoption

UPI 20

UPI 2.0 is the second edition of the fand transfer platform, which was launched in August 2018.
It replaces the previous version, which was designed primarily to support peer-to-peer
transactions on a platform that also accepts merchant payments. Customers may be able to pre-
authorize a transaction and pay at a later date using UPI 2.0. However, the recently announced
version appears to have a slew of other features and perks.

KEY FEATURES OF UPI 2.0

 One Time Mandate

With the UPI mandate functionality, customers can now pre-authorize a transaction and pay at a
later date. For transactions that can be executed later while making a commitment now, these
mandates are produced with one-time block capabilities. Individual users and merchants alike
can greatly benefit from these capabilities, as mandates are generated promptly and payments
are automatically debited on the scheduled day.

 Invoice Verification
The new UPI 2.0 allows the business to send an online, invoice to the client. Prior to making any
payment, a consumer can now see the order amount as well as other crucial facts for verifying
the merchant's credential. The buyer can pay directly to the seller after verifying the amount and
other data.

 Link an Overdraft Account

22
 Users have been able to link their savings and checking accounts to UPI so far. They can,
however, link their overdraft account to it and transact instantaneously with the new upgrade.
Users will be able to access their overdraft accounts and digitally channelize their payments
thanks to UPI 2.0. In addition, the UPI 2.0 transaction limit has been increased from Rs 1 lakh
to Rs 2 lakh

 Additional Security through Signed Intent and QR

Customers can confirm the validity of merchants by scanning a QR or Quick Response code,
UPI 2.0 provides information to the user to help them determine whether or not the retailer is a
verified UPI merchant Customers will be notified through notifications if the receiver is not
secured, according to NPCL.

SCOPE OF UPI

State Bank 0f India (SBI), HDFC Bank, AXIS Bank, ICICI Bank, IDBI Bank, RBL Bank, YES
Bank, KOTAK Mahindra Bank, INDUSLND Bank, FEDERAL Bank, and HSBC Bank are
among the banks that presently offer UPI 2.0 accordingly to the national payments Corperation
of India (NPCI) other banks are also preparing to launch the service in the near future.
While UPI 2.0 offers a lot of unexpected benefits for both customers and business it lacks the
critical functionality of automated recurring payments. This has reportedly frustrated some key
industry participants since the inclusion of this functionality may have enabled automated
recurring payments for user’s banks account to numerous digital business.
The Debut of UPI 2.0 was a water shade movement in the evolution of the payments system,
which was first presented Two years ago “We intend to achieve new milestones with the launch
of UPI 2.0 by expanding UPI presents particularly in the personal to merchant payment of arena
“ stated Mr Dilip Asbe , MD and CEO, NPCL
UPI has the ability to digitise the entire ecosystem surroundings the basic payment feature with
the advent of the second phase. Financial institutions (FIS) should consider using the improved
version of UPF and its features for a variety of P2M actions in no one use cases. Because the sun
has been updated and set at 2,00,000 INR , high-value products/services will now be more
appealing for UPI transactions.
In the future, harnessing UPI 2.0 for the development of next-generation digital platforms for
lending and payments has enormous promise. Containers, for example, can be implemented on
top of UPI's basic mandate feature for a smooth transaction flow. UPI gives richer contest and
information, as well as transactional data, including digital invoices. To determine the
requirement for invoice-based financing, it is possible to aggregate and analyse invoice-loved
data. These cutting-edge models have the ability to give end users next-generation digital
experiences. Hence, there is huge scope of development for UPI 2.0 in the future.

23
 1.7 WORKING OF UPI
To process a UPI transaction, following entities are involved
 Payers App/PSP:

A Payment Service Provider is referred to as a PSP, Customers can use Payer PSPs to initiate
and finish transactions. For instance, Gay, Phonepe, Bhim, Paytm, and so on These apps have
taken the place of traditional bank apps, allowing users to create UPI handles in order to initiate
or accept transactions. These apps are free to use and produce a UPI handle for any customer,
NPCI is in charge of app certification, and these are currently over 20 third-party apps that have
been certified by NPCI to is UPI handles. To begin onboarding users, all of these UPI apps
require a sponsor bank

List of major UPI apps and their respective sponsor banks:

UPI App/PSPs Sponsor Banks Handles
Axis @okaxis
Gay ICICI @okicici
HDFC @okhdfcbank
SBI @oksbi
PHONE PAY Yes @ybl
ICICI @ibl
Axis @axl

National Payments Corporation of India (NPCI)

The National Payments Corporation of India (NPCI) is a non-profit organisation established by
the Reserve Bank of India and sponsored by a number of large banks. It connects banks and
payment service providers as a trusted switch (PSPs). NPCI ensures that data flows between
banks and payment apps are routed to the correct and confirmed destinations, similar to VISA's
function in Card payments.
In the case of UPI payments, the National Payments Corporation of India (NPCI) has made
financial services compatible. Users can link any of their bank accounts to any UPI app and
transfer or accept payments. For everyone in the ecosystem, NPCI also exposes a number of non-
financial interoperable APIs. Validate VPA/UPI ID, Bank list, and so on.

 Issuing Bank (Senders Bank) Issuing Bank

Money is moved from the issuing/bank sender's account to the acquiring (merchant/ receiver's)
bank account in the event of UPI payment. On NPCI's request, the issuing bank must debit money
and send a debit response to NPCI once the debit has been completed successfully.
 Acquiring Bank (Receivers Bank)
The acquiring (receiver) bank's responsibility is to credit money in response to NPCI's request
and to provide a credit response to NPCI after the credit has been completed successfully

 Acquiring Bank (Receivers Bank)

24
 The acquiring (receiver) bank's responsibility is to credit money in response to NPCI's request
and to provide a credit response to NPCI after the credit has been completed successfully

 Payee PSP
In P2M (Person to Merchant) transactions, this is the acquirer or payment gateway that the
merchant uses.
In basic terms, a user with a smartphone and a UPIs-partnered bank's savings or current account
can download the Android app to make peer-to-peer (P2P) and peer-to-merchant (P2M)
payments using a virtual payment address (VPA). As a result, in order to conduct a UPI
transaction, the user must have the UIP app, MPIN, VPA, and a partnered UPI service bank

1.8 UPI ARCHITECTURE

1.8.1 Architecture
The architecture of UPI is depicted in the picture below, which allows USSD, smartphone,
Internet banking, and other channels to be integrated onto a single layer at NPCI. Using systems
such as IMPS, AEPS, NFS, E-com, and others, this common layer organises transactions and
ensures settlement across accounts. The use of existing systems ensures the security of payment
transactions across many channels while also maximising the value of all previous investments.
Merchant sites receive payment using a virtual address, eliminating the need to provide account
information or sensitive information on websites or third-party applications. Payment
authentication and authorization are always done utilising the personal mobile in this solution
The following are the essential components of every payment
1. The payer’s and payee’s account numbers for routing and authentication purposes.
2. Credentials for authentication.
3. The amount of the transaction.
4. A time stamp.

 PAYMENT ADDRESS
Every user's payment address is different. It's incredibly adaptable and changeable. Our mobile
number and account number are linked to this location. It's termed a virtual payment address
because it's not our actual payment address, but rather our bank account information (VPA). At
the proper moment, the provider is supposed to link the payment address to actual account
details. Providers of virtual addresses should make the address translation API available so that
NPCI can convert their virtual addresses to a usable address.
 AUTHENTICATION
The process of identifying something or someone's identity is known as authentication. The
communication takes place between the two parties in the conditions of the transaction, and both
parties must communicate the required details among themselves so that each party's identity is
known to the other. A specific benefit of single-click two-factor authentication is available in
UPI.
There are primarily two levels of security.
1. Device fingerprinting is the first line of defence in terms of security. One's bank account is
linked to his or her personal UPI app in this case. As a result, the NPCI servers obtain all of the

25
 user's device information. As a result, the unique account number is connected to the user's cell
phone number and device ID combination. As the initial element of authentication, this
combination is used.
2. The M-PIN is the second level of security. When a user connects his bank account to the UPI
app, he is prompted to create an MPIN that is only known by him. As a result, the user is
prompted to input his MPIN throughout each transaction.

 AUTHORISATION
The process of authorising a user's access to resources is known as authorization. When a user
logs into a computer, for example, the system examines what resources that user is permitted to
access depending on the rights granted to him. The system administrator controls these
permissions. Authentication comes before authorization in a logical order.

1.8.3 Existing Systems

Before the creation of the single payment interface, NPCI created a number of different payment
infrastructures. The following are the current systems:
1. National Financial Switch (NFS): The National Financial Switch (NFS) established a uniform
standard for digital interoperability across all institutions in the country. NFS is now the
backbone that supports the country's largest domestic ATM network.
2. RTGS: Real time gross settlement system an ongoing process for paying individual payments
the basis for ordering without any deductions is in arrears with credits throughout central bank
books (e.g. consolidation activities). Once Completed real-time gross settlement payments are
irreversible.
3. NEFT (National Electronic Funds Transfer): NEFT (National Electronic Funds Transfer) is a
nationwide payment mechanism. Individuals can electronically transfer monies from any bank
branch in the nation participating in the Scheme to any other individual having an account with
any other bank branch in the country participating in the Scheme. Batches of NEFT transactions
are settled.

26
UPI works on a common layer or a unified interface developed and hosted by NPCI. This
common layer orchestrates transactions and ensures settlement across bank accounts using IMPS
and Aadhaar Enabled Payment System (AEPS). Banks, financial institutions and other entities
that provide UPI services connect to the NPCI's unified interface through standard APIs to enable
transactions from Virtual Payment Address avoiding the need to share account details or
credentials. In UPI solution, payment authentication and authorization are always done using
personal phone. Since this layer offers a unified interface, any-to-any interoperable payments
can be accomplished using standard set of APIs.17

All APIs are exposed as stateless service over HTTPS using XML input and output and all
entities consuming UPI services must ensure idempotent behavior for all APIs. These APIs are
asynchronous in nature meaning once the request is sent, response is sent back separately via
corresponding response API. This allows the response to API call to return to the caller
immediately after queuing the request. All request-response correlation must be done via the
transaction ID set by the originating point. Callers are expected to call the API with a unique
transaction ID for which response is sent via a response API exposed by the caller. This allows
same APIs to be used for instant payment as well as delayed payments. This also allows APIs to
scale without having to wait in a blocking mode.

There is a set of standard APIs exposed to various participants of the UPI ecosystem key. A set
of Financial and Non-Financial transactions can be done using these APIs. Apart from
transactional APIs there are a set of Meta APIs to ensure that the entire system can function in
an automated fashion. These Meta APIs allow PSPs to validate accounts during customer
on boarding, validate addresses for sending and collecting money, provide phishing protection
using white listing APIs, etc. Figure 2 shows the high level architecture

27
Some of the key APIs to enable UPI transactions are:
1) Payment API: This is the primary APIs used for routing the transaction and is used to initiate
Pay Request (Push Payment) and Collect Request (Pull Payment). The API contains remitter and
beneficiary details.
Authorization & Address Translation APIs are used to obtain appropriate authorization details
and translate the specific Virtual Payment Address to the common global addresses (Bank
Account Number and IFSC Code, Aadhaar number). This allows users to simply
provide such virtual (tokenized) address to others (individuals, entities, etc.) without to reveal
actual account details.
2) Keys List APIs: These APIs enable secure capture and communication of credentials to
authenticate transactions by various entities in the UPI ecosystem. These APIs are used to request
for and cache the account providers and other entities list of public keys. Trusted and certified
NPCI libraries and utilities are used for credential capture and PKI public key encryption at
capture time.

Virtual Payment Address

28
 Every payment transaction requires source (remitter) account details to make the debit and
destination (beneficiary) bank details to make the credit. UPI enables the users to create their
Virtual Payment Address (UPI ID) for their bank accounts. This Virtual Payment Address is an
abstract form to represent and uniquely identify the bank account details in a normalized
notation. Thus for any transaction to take place it is vital to resolve the Virtual Payment Address
into the actual bank accounts to make the debit and credit transactions. In current UPI
architecture the Virtual Payment Address is denoted as "xyz@psp" form where xyz can be any
unique name and psp is the name of the Payment Service Player whose application the user uses
to create the VPA. The Virtual Payment Address is created by the PSP UPI App and is stored in
the PSP database while the bank account number and IFSC Code (Global Address) is stored in
the NPCI Mapper. PSPs expose their Address translation algorithms with NPCI to enable it to
decode the VPA into valid bank account details. Thus, The Virtual Payment Address is resolved
by the respective PSP UPI Apps while the Account Number and IFSC Code is resolved against
the Virtual Payment Address by the NPCI Central Mapper. This is a unique feature in UPI since
it removes the need to know the full bank details of parties making a transaction. Users can
exchange their Payment Address which is sufficient to make the transaction.
Transactions in UPI

As mentioned above UPI allows a set of Non-Financial and Financial Transactions.

Financial transactions include two types of transactions:

1) Pay Request (Push Payment): This transaction is initiated by the user in which money is
pushed into the bank account of the beneficiary. This Push Payment can be done using
the Account Number and IFSC Code, Aadhaar Number or the Virtual Payment Address
of the beneficiary.
2) Collect Request (Pull Payment): A Collect Request transaction is initiated by the
beneficiary to pull funds from the payer by using Virtual Address. The user can also an
expiry time limit of the Collect Request. The payer will receive the collect request on
his PSP UPI App which is to be authenticated using 4-6 digit MPIN to complete the
transaction.

LIMITATIONS
I.For small-ticket digital retail payments, RTGS and NEFT are ineffective.
II.Transaction restrictions are high.
III.Batch settlements with a delay
IV.Hours of operation that are set in stone

1.8.4 Considerations for Safety

The following terms are defined to ensure data security.
1. Sensitive Data- Sensitive data is information that needs to be kept safe from unwanted access
in order to protect one's privacy. It contains personal information such as PINs, passwords, and
fingerprints, among other things. This information should only be transmitted in encrypted form.

29
 2.Personal Data- This category of data includes account information. This information is
encrypted and saved on the PSP (Payment System Players)
3. Non-sensitive Data: Non-sensitive data does not need to be encrypted. Name, quantity,
timestamp, location, response code, and so on are common examples of this type of data.

These are some protocols taken to ensure safety and security of the data

 Keeping Account Information Safe

 It is required for the PSP to use the secure protocol when transmitting sensitive data such
as account details from the device to the PSP server. PSP is required to keep account
information secure within the PSP system.
 Keeping Authentication Information Safe
 The NPCI provides a trusted common library that contains sensitive credentials such as
MPINs, passwords, and biometrics. The common library stores and, encrypts
authentication information. The encrypted credentials should not be stored in any
permanent storage by the PSP. Outside of the common library, the PSP should not capture
the issuer's authentication credentials.

1.9 SERVICES PROVIDED BY UPI

To promote the concept of cashless transactions, the Indian government has sponsored the
implementation and use of the Unified Payments Interface (UPI). Consumers can use UPI
transactions to make payments using a virtual ID, which means their account information isn't
shared with third-party apps or websites. For those who are unfamiliar with UPI, it is important
to understand that it encompasses a variety of services. The following is a list of UPI's services
SERVICES AVAILABLE FOR CUSTOMERS
 Account Balance Inquiry: Using a UPI-enabled app, you can check the balance of your
registered bank account.
 Transaction History: The UPI-enabled app can verify recent transactions made through your
account.
 Pay Money: One of the most popular/wanted features of the UPI-enabled app is the ability to
send money. To make a payment, you can use any of the following information
1. Virtual Address
2. Account Number and IFSC
3. Mobile Number and MMID
4. Aadhaar (yet to be functional)
 Request Money: Consumers can make a money request if they know the payer's virtual address.
To request money, simply enter the amount and the payer's virtual address.
 Add a Bank Account: Your UPI app allows you to link several bank accounts. All of these
accounts, however, must be linked to the same cell phone number. Before completing a
transaction, you have the option of selecting the bank account with which you want to work.
 Set/Update MPIN: When you register for the app, you can set your UPI PIN. You can also
change your UPI PIN at any time.
 Account Management: The UPI-enabled app allows you to manage your bank account. Instead
of needing to launch multiple bank apps to handle your accounts, you can manage them all in
one spot.
 Notifications. UPI-enabled apps provide you notifications when the status of your
30
 SERVICES AVAILABLE FOR MERCHANTS

 Collect requests for payment: The Merchant PSP app allows merchants to send a Collect
Payment request to a VPA. Customers can accept a collect request by providing their UPI PIN,
and the payment will be credited to the merchant when the customer's account has been debited.
 Payments with QR codes are now possible: Merchants can now accept QR payments through
UPI. Static and dynamic QR payments are supported by the solution.
 Checkout from the shopping cart: Customers can pay with UPI on a merchant's website
during the checkout process.
 Payments made within the app: To finalise a purchase, users can use the UPI App to navigate
to the merchant's payment page within the PSP app.

1.10 ROLES AND RESPONSIBILITIES OF PARTICIPANTS

Following are participants of Unified Payment Interface:
 National Payments Corporation of India (NPCI)
 Third Party Application Provide
 Third Party Application Provider/TPAP
Each participants have different roles and responsibilities which are mentioned below:
1. National Payments Co-operation of India (NPCI)
 The Unified payments Interface (UPI) platform is owned and operated by NPCI
 With regard to UPI , NPCI establishes rules , regulations and guidelines and guidance as well
as the participants respective duties , responsibility and liabilities . This comprises transaction
processing and settlement , dispute resolution and settlement cut-offs
 The participation of Issuer Banks, PSP Banks, Third Party Application Providers (TPAPS), and
Prepaid Payment Instrument issuers (PPIs) in UPI has been approved by the National Payments
Corporation of India (NPCI).
 NPCI delivers a UPI system and network that is safe, secure, and efficient
 Members who use UPI can use NPCI's online transaction routing, processing, and settlement
services.
 NPCI can perform audits on UPI participants and request data, information, and records related
to their involvement in UPI, either directly or through a third party.

2. Payment Service Provider/ PSP

 PSP Bank is a member of UPI and connects to the platform to offer UPI payment services,
which it then passes on to the TPAP, allowing end-user customers and merchants to make
and accept UPI payments.
 PSP Bank onboards and registers end-user customers on UPI, either through TPAP's app,
and ties their bank accounts to their respective UPI IDs.
 PSP Bank is responsible for end-user client authentication at the moment of registration,
whether through its own app or TPAP's UPI app.
31
  PSP Bank is responsible for ensuring that TPAP and its systems are sufficiently secure
to function on the UPI platform
 PSP Bank is also responsible for ensuring that the UPI app and systems of TPAP are
audited to ensure that the the UPI app and systems of TPAP are audited to ensure the
security and integrity of end-user customer data and information, including UPI
transaction data and UPI app security.
 Only in India, PSP Bank is required to store all payments data, including UPI Transaction
Data, obtained for the purpose of facilitation UPI transactions
 PSP Bank is responsible for allowing all UPI consumers to link their UPI ID to any bank
account from the list of banks available on the UPI network.
 PSP Bank is responsible for establishing a grievance redressal procedure to resolve end-
user customer complaints and disputes.

3. Third Party Application Provider/TPAP

TPAP is a service provider that uses PSP Bank to participate in UPI.
 TPAP is responsible for adhering to all PSP Bank and NPCI criteria in connection to
TPAP's involvement in UPI.
 It is the responsibility of TPAP to ensure that its systems are sufficiently secure to operate
on the UPI platform.
 In connection to UPI and TPA P's participation on the UPI platform TPAP is responsible
for complying with all applicable laws,rules,regulations, and guidelines set by any
statutory or regulation authority, including all circulars and guidelines issued by NPCI in
this regard
 TPAP is required to store all payments data, including UPI Transaction Data, that it
collects for the sole purpose of facilitating UPI transactions in India.
 TPAP is responsible for allowing RBI, NPCI, and other RBI/NPCI-designated agencies
access to TPAP's UPI-related data, information, and systems, as well as conducting audits
of TPAP as and when necessary, by RBI and NPCI.
 TPAP shall provide end-user customers with the ability to file a complaint using the
TPAP's grievance redressal facility, which is accessible via the TPAP's UPI app or
website, as well as other channels deemed acceptable by the TPAP, such as email,
messaging platforms, IVR, and so on.

Background

Reserve Bank of India is the regulatory body with Payments and Settlements Systems Act (2007)
[5] being the primary legislation governing payments systems in India. Making India "less cash"
dependent and promoting digital payments has been a focus area for RBI since last decade. The
five yearly RBI Vision Documents which sets the tune and vision for achieving key objectives
in the payments ecosystem aptly sums up the priority for RBI to transform the payments
landscape in India. "To proactively encourage electronic payment systems for ushering in a less-
cash society in India and to ensure payment and settlement systems in the country are safe,
efficient, interoperable, authorised, accessible, inclusive and compliant with international
standards."
The period 2016-17 has been the pivotal period for payments landscape in India, the country
witnessed profound changes in payments ecosystem with radical policy decisions, introduction
32
of new age payment systems and rapid changes in user behavior. Demonetization was introduced
during this period whereby 86% [7] of the currency notes were rendered worthless overnight.
During demonetization paper money became seance and one could witness serpentine queues in
franks and ATMs to withdraw meagre currency that was available. Business and trade almost
came to a standstill and the GDP growth rate decreased in spite of rapid introduction of new
currency notes and use of digital forums of payment. The year preceding demonetisation saw the
emergence of mobile based digital wallets which witnessed rapid adoption by a large smartphone
using population. Emergence of mobile based digital wallets was largely driven by new age
private technology companies.
During the same period with the clear mandate from Reserve Bank of India to drive next
generation digital payments, National Payments Corporation of India (NPCI) set out to create a
new payment system called Unified Payment Interface (UP). Unified Payment Interface (UPI)
was formally inaugurated by then RIBI Governor on 11 April 2016 [8] and launched for public
use on 25 August 2016.
Reserve Bank of India has been relentlessly working in the direction of enabling a digital
payments ecosystem in the country. In this direction, RBI under its guidance and with support
from Indian Banks Association (IBA) enabled the formation of National Payments Corporation
of India (NPC) as an umbrella organization for all retail payments system in India with all leading
bank as stakeholders shareholders [10], NPCT was formed with the mandate to consolidate and
integrate the disparate systems with varying service levels into nation-wide uniform and standard
business process for all digital payment systems. The clear objective was to create a uniform and
affordable payment system by leveraging technology and enable financial inclusiveness in the
country. UPI was a culmination of a series of developments by NPCI over a period of 8 years
since its inception in 2009. The first step taken by NPCI in this direction was the standardization,
simplification and implementation of National Finance Switch (NFS) [11] for all the banks of
the country. NFS set the common standard and enabled digital interoperability between all hanks
in the country. NFS is now the backbone which powers the largest domestic ATM network. in
the country.
The next revolutionary step foe NPCI was to enable Immediate Payment System (IMPS) [12]
riding the interoperable layer of NFS. Prior to IMPS the modes for digital. transactions in hanks
were real time Gross Settlement System (RTGS) and National Electronics Funds Transfer
System (NEFTL RTGS and NEFT are unsuitable for small ticket digital retail payments due
inherent limitations of these systems like high transaction limits, delayed settlement in batches
and fixed operating time hours. Thus NPCI introduced IMPS, a real time retail payment service
with round the clock availability. IMPS is channel independent and can be accessed through
mobile phone, internet, ATM and Unstructured Supplementary Service Data (USSD) on feature
phones. IMPS provided a mobile based interoperable fund transfer service involving various
stakeholders such as banks, merchants, and telecom service providers. IMPS works on
immediate settlement where settlement takes place on at a granular section level with instant
transaction confirmation to both the remitter and the efficacy.
IMPS transactions wore enabled through mobile phones and can be considered the precursor to
Unified Payment Interface (UPI), since UPI transactions are settled through IMPS. In India,
mobile phone numbers are connected with bank accounts. Leveraging this connectivity Mobile
Money Identifier (MMID) was provided to mobile users holding a bank account. MMID enabled
the abstraction of the need to know the bank account details of the recipient to make a payment.
With IMPS users could make Push payments using Phone Number and MMID or Account
Number and IFSC code of the recipient or request a payment using Phone number and MMID
33
of the recipient. IMPS transactions grew in value from Rs. 4.3 billion in 2014 to Rs. 1622 billion
in 2016

IMPS transactions were being mainly used to transfer money using internet banking but
were not successful for retail small ticket transactions primarily for two reasons;

1) The need to know the bank details or the MMID and Phone number of the recipient.
2) There was no common interoperable platform to connect both the payers and the payees
India has been cash driven economy, primarily due to lack of infrastructure to make digital
payments, India has enough debit and credit card users which have been steadily increasing over
the years from 304 million cards in 2012 to 910 million cards in 2017 [15] but digital payment
acceptance infrastructure is grossly inadequate. The number of POS machines installed at
merchant locations across India is only 2.7 million [15] (1.5 million prior to demonetization) for
a merchant base of over 20 million compared to 12.7 million POS machines in the USA [16].
The low number of POS machines in India can be attributable to the high cost of POS machines
which typically cost $120-150 per machine. This low penetration of acceptance infrastructure
(POS machines) for digital payments has made ATM machines as the focal point for dispensing
cash which is then used for transactions. An interesting data point in this regard is that value of
transactions using a debit card as ATM Machines is about Rs. 26,000 billion per annum versus
Rs. 4,140 billion at POS machines [15]iz. consumers withdraw 6.2 times more money at ATMs
and then pay cash to the Merchants se transact. This is primarily due to lack of POS machines
with Merchants. Thus, UPI was conceptualized to enable a universal, low cost digital payment
system both for consumer so make digital payments with ease and merchants and businesses to
others without having ever provide account details or credentials on 3nd party applications or
collect digital payments in a cost effective manner without the need for any POS machines.
UPI has been launched recently. Therefore, the data has been collected from government and
other bodies and compared different mode of payments and their number of transactions are
collected. Information has been drawn from e-journals, articles from renowned analyst and
newspapers. Thus, the shady is conceptual and descriptive type

Common Features of UPI Systems are

 Ability to use personal mobile as the primary device for all payments
 Ability to use Aadhaar number, mobile number, card number, and account number in a
unified way. In addition, ability to pay and collect using "virtual payment addresses"
Make payments only by providing an address with websites
 Ability for sending collect requests to others
 Ability to make payments using 1-click 2-factor authentication all using just a personal
phone without having any acquiring devices or having any physical tokens

Common Features of UPI Systems are

1. Payer and payee account details for authorization

2. Authentication credentials (password, PIN, biometrics, etc. as required for debit. can be bank
provided or 3rd party provided such as UIDAI)

34
3. Transaction amount
4. Transaction reference
5.Time limit
6. Other details such as location, product code, mobile number, device details, etc, as required.

Impact of UPI on Businesses

Apart from being the most cost effective, fast and seamless payment method UPI enables digital
payments for an entire spectrum of businesses both for brick and mortar and online merchants.
For physical businesses, each employee can be enabled to collect digital payments since there is
no need of any POS machine, each employee can be provided a unique UPI ID and QR Code
which the employees can present to the customer to collect payments. Apart froes proximate
payments where the customers is physically present at the billing counters, UPI opens unique
opportunities for businesses to collect payments where customers are not physically present for
example. Insurance premium collection, school fee and electricity bill payments etc, where
payment request can be sent to the customer and customer can pay remotely using mobile
phones. Another important use case for businesses can be ta enable payment at the time of
delivery, In India there is a large prevalence of cash on delivery, almost 60% of ecommerce sales
happen with cash payment being made at the time of delivery. Such payment at time of delivery
can be converted into digital payment at the time of delivery using UPI whereby a customer can
easily pay through UPI at the time of delivery.

The Way Forward-UPI

UPI has witnessed rapid growth that can be attributed to the expanding ecosystem promoted by
hunks and other payment service players and increasing adoption by the users. Security. case of
use and development of business solutions are paramount to make UPI as a рауment : system of
choice both for users and businesses. In this direction NPCI is coming out with an upgraded
version of UPI called UPI 2.0 with enhancements in security, case of use for customers and
which open new use cases for businesses and expand the UPI ecosystem. The salient features of
UPI 2.0 are expected to include.
Transaction authentication using Biometrics: Currently users can authenticate their payments
using 4-6 digits MPIN. This MPIN can be self-generated by the user on the PSP UPI App with
the ability to change the MPIN as and when required. This MPIN is captured by secure NPCI
libraries and authenticated by the Issuer Bank. However this use of MPIN has its own limitations
with users forgetting the MPIN and entering wrong MPINs leading to failed transactions.
Another perceived risk in fear of fraudulent transactions in case of less or theft of mobile phone.
To overcome these issues UPI 2.0 will include transaction authentication using biometrics of
user like fingerprint or iris prints. User will have the option to authenticate the transactions using
his/her biometrics. In order to enable biometric authentication UPI has been integrated with
Unique Identification Authority of Media (UIDAI) which provides online authentication services
including biometrics and OTP authentication, UIDAI is the central repository of biometric data
of more than 1. 16 Billion or about 87% Indians who have registered for national unique identity
service through Aadhaar. Also, Aadhaar Number of the user is now mandatorily mapped to the
bank account of the user. Mobile phone manufacturers are coming up with mobile phones which
can rend fingerprints and iris prints of users. Such devices will be required to be certified and
registered with UIDAI to enable them to capture the biometrics of the user. Once the user decides
35
to authenticate the transaction using biometrics, fingerprint or iris print in captured on the mobile
phone and communicated to NPCI in encrypted form which then invokes the UIDAI
authentication API on behalf of Issuer Bank to authenticate the biometrics
UPI Payment Mandate: One of the biggest me cases for consumers and businesses is to make
periodic recurring payments like utilities bill, school fee, insurance premium and loan EMI
payments. To enable businesses to accept periodic payments and hassle free

DIGITAL PAYMENT MODES IN INDIA

There are number of facilitators which are leading to the growth of digital payment and transition
from cash economy so a less cash economy. These facilitators include penetration of internet
connectivity on smart phones, non-bunking financial institution facilitating digital payment, one
touch payment, rise of financial technology sector and cash by government either by giving
incentives or tax breaks. Today there is a positive atmosphere for growth of digital payment in
India. Currently there are several modes of digital payments available in India. These include:

 Online or mobile wallets

 Prepaid credit cards
 Debit RuPay cards
 UPI: Unified Payment Interface
 NEFT: National Electronic Funds Transfer (NEFT)
 RTGS: Real Time Grass Settlement.

Significance of the Study

Unified payment interface is the one of the recent innovation introduced by national payment
corporation of India. After the implementation of UPI there is a dramatic changes in the payment
method. Hence it is important to know the benefits and drawback of UPI services and customer
perception towards new innovation adopted by the national payment corporation. In this study
the researcher aims to identify the customer preference towards unified payment interface and to
know the impact of unified payment interface in customer satisfaction.

Need For the Study

UPI is an abstraction over standard payment transfer mechanism like IMPS. It helps to hide
sensitive account information along with consumer convenient. Also UPI is fast and does not
involve the costs like debit card or net banking. By using statistics government and other bodies
the study will approach to understand, discuss and bring out the issue relevant to the title.

Objective

 To find out the most preferred mode and application for digital payments by the people
 To find out the frequency of digital payments by different age and income groups.
 To find out the problems encountered while using UPL
 To suggest the measures for attracting more consumers
36
SWOT Analysis of Unified Payment Interface (UPI)
Strengths-
1.Inclusive Access Enabler: UPI emerges as an inclusive digital payments marvel, effectively
extending its reach to even the most modest business operators within regions hampered by
limited payment infrastructure. By eliminating the arduous requirement for intricate payment
credentials, it impeccably orchestrates a landscape of convenience and transparency in
transactions

2.Corruption Deterrent Catalyst: Particularly in the context of developing nations, NPCI's UPI
demonstrates its prowess as a robust deterrent to corruption. Its implementation paves the way
for a substantial reduction in the pervasive corruption that often taints economies and offers a
compelling solution to curtail the clandestine parallel economy.

3. Simplified Transaction Nexus: The core brilliance of UPI lies in its seamless and
uncomplicated transaction mechanism. It ingeniously positions the mobile phone as the primary
conduit for a wide array of transactions, seamlessly accommodating person-to- person, person-
to-business, and business-to-person exchanges.
4. Pay & Collect Efficacy: The UPI platform, with its ingenious design, empowers users to
effortlessly "pay" or "collect" monetary exchanges via the convenience of their mobile devices.
This user-centric approach ensures a hassle-free and intuitive experience.

5. Diverse Payment Modalities: NPCI's UPI introduces a bouquet of versatile payment options.
Users can seamlessly transact using a plethora of identifiers, including tailor-made Virtual
37
 Payment Addresses (VPA), the 12-digit AADHAR numbers issued by the Unique Identification
Authority of India (UIDAI), bank account numbers, and the Indian Financial System Code
(IFSC)

6. Fortified Security Architecture: UPI employs an intricate web of security features, assuring
the protection of sensitive information. Through the utilization of Virtual Payment Addresses,
users can execute payments without the necessity to divulge their confidential account
credentials, establishing a robust layer of security

7. Versatile Virtual Payment Address Deployment: With the advent of UPI 2.0, users gain the
remarkable capability to link multiple bank accounts, including overdraft accounts, while
concurrently generating an unrestricted number of Virtual Payment Addresses via mobile
applications offered by Payment Service Providers (PSPs).

8. Interoperability Vanguard: One of UPI's crowning achievements is its commitment to an open

and fully interoperable system. This shatters the shackles of closed networks and silos, offering
an environment of frictionless collaboration among an array of payment system participants.

9. Bill Payment Integration: UPI elevates the payment experience by seamlessly integrating the
Bharath Bill Pay service (BBPS). This pioneering integration consolidates the process of paying
utility bills, unifying diverse bill payments onto a single, user-friendly platform.

WEAKNESSES-
Latent Transaction Hiccups: A notable vulnerability within NPCI's UPI ecosystem lies in the
potential for transaction delays. Technical glitches can occasionally disrupt payment settlement,
causing a temporary interruption in the transaction process.
User Frustration with Dual Verification: While security is paramount, the requirement for two-
factor authentication, involving mobile-based verification and PIN entry, can sometimes lead to
user irritation. The meticulous security measures, although necessary, may inadvertently
inconvenience users.
1.Transaction Ceiling Confinement: One substantial drawback of UPI is the imposed transaction
limit, capped at Rs. 2,00,000. This constraint primarily confines UPI's utility to the retail payment
segment, limiting its applicability for higher-value transactions.
2.Mandatory Cooling Period: Payments executed through methods other than Virtual Payment
Addresses (VPAs), such as account numbers and Indian Financial System Codes (IFSC), are subject
to a mandatory cooling Period akin to NEFT/RTGS transactions. This cooling periods can be seen
as an impediment to real-time financial transactions.
3.Vulnerability to Cybercrimes: A significant concern surrounding the utilization of UPI pertains
to the lack of robust bank assistance in addressing customer security issues. This gap in support
becomes particularly glaring when dealing with cybercrimes. Fraudsters increasingly exploit UPI
for unauthorized fund transfers, necessitating customers to exercise vigilance and caution during
UPI transactions.

38
OPPORTUNITIES-
1.Robust Banking Ecosystem: A formidable and well-established banking network, coupled with
the government's Digital India initiative, played a pivotal role in steering the nation. toward a
cashless economy. The post-demonetization landscape witnessed a remarkable transition, further
reinforcing the foundations of NPCI's UPI
2.Retail Digital Payment Surge: The fiscal year 2020-21 witnessed a phenomenal surge in the
retail digital payment segment, with transaction volumes skyrocketing from 12.5 billion. to 22.3
billion, and the transaction value doubling from Rs. 21.3 trillion to Rs. 41 trillion. This
exponential growth underscores the increasing acceptance and adoption of digital payment
services.
3.Internet Accessibility: A substantial segment of the Indian population resides in semi-urban
and rural regions, The proliferation of the internet and mobile phone usage is poised to expand
the potential consumer has in these areas, offering a promising avenue for UPI's continued
growth.
4.Diversified Service Portfolio: UPI, which initially facilitated fund transfers between bank
accounts, has since broadened its scope to encompass an extensive array of digital payment
services. These include bill payments, investment transactions, insurance payments, charitable
donations, management of overdraft accounts, and the facilitation of one-time payment
mandates, among others.

THREATS-
While Unified Payment Interface (UPI) has witnessed tremendous growth and popularity in
India, there are some challenges associated with its usage. Here are some notable challenges:
1.Awareness and Adoption- Despite the widespread adoption of UPI, there is still a segment of
the population, particularly in rural areas, that lacks awareness and understanding of how UPI
works. Educating and creating awareness about UPI's benefits and functionality remains a
challenge.
2.Connectivity and Infrastructure- UPI heavily relies on stable internet connectivity and robust
infrastructure. In remote or underdeveloped areas with limited internet access or network
coverage, users may face difficulties in accessing UPI services, leading to interruptions in
transactions.
3. Technical Glitches- As with any digital platform, UPI is not immune to technical glitches or
system failures. Instances of app crashes, transaction failures, delayed notifications, or other
technical issues have been reported. While efforts are made to enhance system stability,
occasional disruptions can impact user experience.
4. Security Concerns- While UPI transactions are secured with two-factor authentication, there
is still a need for continued vigilance regarding cybersecurity. Instances of phishing attempts,
fraudulent UPI apps, or unauthorized access to UPI accounts have been reported. Users must be
cautious and adhere to recommended security practices to safeguard their accounts.
5. UPI imposes transaction limits, which can vary based on the bank and user profile. These
limits may restrict higher-value transactions, impacting businesses or individuals with larger
payment requirements. Although the limits are imposed to ensure security, they can pose a
challenge for certain transactions.
6. Interoperability Issues- While UPI aims to provide interoperability across different banks,
there might still be instances where compatibility issues arise between certain banks or payment

39
service providers. This can result in transactions being declined or delayed, affecting the
seamless experience UPI intends to offer.
7. Merchant Acceptance- While UPI aims to provide interoperability across different banks,
there might still be instances where compatibility issues arise between certain banks or payment
service providers. This can result in transactions being declined or delayed, affecting the
seamless experience UPI intends to offer.

40
 BEST UPI APPS IN INDIA

PhonePe stands first in our list of best UPI apps in India. It is a revolutionary app that made the
Indian population start trusting and moreover making online mobile payments. PhonePe not only
helps in making UPI payments but users can also recharge, make online bill payments, order
food, shop, etc. all in just one app.
As of November 2020, PhonePe has 868.40 million transactions in volume with Rs 1,75,453.85
Cr in transaction value. PhonePe also provides various offers, rewards, and cashback to its
customers. Having one of the simplest interfaces with the safest and fastest online payment
experience in India, PhonePe is definitely one of the best payment apps in India and better than
most of the other UPI
Payment apps or internet banking services.

41
PhonePe most popular and top UPI app in India. Its work Digital wallet and e- commerce
payment system. Flipkart parent company of Phonepe
This app acquired by now Flipkart and it provides payment system UPI powered by BHIM UPI,
Icici bank and yes bank. (You can use Every bank)

Phone Pe founded in December 2015. It provides the fastest quick Money transfer and payment.
So it makes your life easy day by day.

Phone pe provides services are Payment systems, digital wallets, mobile payments and online
shopping. You can send and receive money through phone pe with recharge DT mobile, data
cards, make utility payments, buy gold and much more. All payment that phone pe provides
through UPI and phone pe have owner phone pe wallet, so it's made very fast money transfer.
Phone pe also provides lots of offers, cashback, so you save more money using Phone pe.

PROS:
Easy and fast payment
All in one app (UPI, money transfer, recharge bill payment and more)
Secure and safe
Easy to use
Multi-Language available

42
CONS:
Delay in Payment means sometimes payments are processing or pending. Every problem solved
within 5-10 minutes but sometimes take 1-2 days. But don't worry phonepe provides support
very well so enjoy

 GOOGLE PAY

A simple and secure payment app Google Pay, formerly known as Tez App, stands the biggest
and best app in our list of best UPI apps in India. This app has accumulated a huge customer
base in India within a small-time frame. And obviously, having a big brand name of 'Google' has
helped this app to build trust among the new and existing customers.
As of November 2020, Google pay has 960.02 million transactions in volume with Rs
1,61,418.19 Cr in transaction value. Using Google Pay, users can send
money to friends, pay their bills, shop online, recharge, or pay at the nearby café, etc. through
secure payment by Google.
Another most enjoyable part of using Google Pay is the "Scratch cards". Whenever the users
make a new transaction, they are awarded a gift card in the form of a scratch card. After
scratching the card, users can earn a gift in the form of money which directly gets credited into
the registered bank account.
Anyways, you won't earn a Scratch card on every transaction as there are a minimum value and
number of transactions predefined by the app. However, if you're lucky, you may get a reward
of up to Rs 1 lakh.

43
Google provide UPI payment app by Google pay. Everyone knows about Google Tez but
Recently change this app name Google Tez to Google pay. This app most use UPI app in India.
It provides a very fast and easy way to send or receive payment.
Google pay tied up with four banks (ICICI Bank, State Bank of India, Axis Bank and HDFC
Bank) in India to provide you VPA service. You also use every bank. Google pay UI very
common and easy to use so that everyone can use it
Google pay don't provide any digital wallet so you can sand and received money directly through
banks. It's good for you. Also, provides Recharges, bill payment, and more.

PROS:
First UPI app provides NFC technology
Highly secure UPI app.
Chat before money transfer
Power by Google

44
CONS
At times payment are pending, but Every problem is solved within 5 minutes My Personal
Experience.

PAYTM
Paytm is a quite well-known mobile payment app in India. Along with Paytm Mall, it also offers
Paytm Wallet and Paytm UPI (which was introduced in the year 2017). In simple words, we can
call it a mega store due to the variety of products and services provided by this app. Paytm users
can perform almost each and every activity related to online payments on its app. And that's why
it is certainly the most used payment app.
As of November 2020, Paytm has 260.09 million transactions in volume with Rs 28,986.93 Cr
in transaction value. From making online Payments to buying household items, groceries,
IRCTC train ticket booking, bus & flight booking. movie tickets, LIC premium payment, metro
card recharge, buying gold, making loan payments, paying e-challans & more, everything can
be done on this app

45
Paytm of most popular, highest download and one of the India biggest digital wallet. It provides
excellent UI and easy to use. Whatever if you want everything finds on Paytm because Paytm
provides everything such as mobile Recharge, Bill Payment, Tickets booking, now add UPI
system and much more. One place you see everything. First starting Paytm provides an only
mobile wallet, day by day add more and more features.

46
AMAZON PAY

As of Nov 2020, Amazon pay is the fourth biggest app used for making UPI transactions.
Amazon pay got 37.15 million transactions in volume with Rs 3,624.51 Cr in transaction value
in this month.
Amazon Pay, a payment method that allows Amazon users to pay for goods and services on your
website using the payment methods already stored in their Amazon accounts.
Having the big brand of Amazon definitely helped Amazon Pay to scale at such a fast pace in
India within a small-time frame.
Moreover, having integrated with most shopping and payment gateway along with awesome
cashback rewards , amazon has become very popular
How does Amazon Pay work?
If you have an Amazon account, you are ready to start using Amazon Pay wherever you see the
Amazon Pay button. No additional registration is necessary. Amazon Pay simply uses the
information and payment methods stored in your Amazon account.

47
Amazon Pay is now the fourth biggest UPI app in India, using by people. And it comes from
Amazon, so don't worry about safety. It's totally fine. Moreover, Amazon Pay provides lots of
Cashbacks, so you get save some money. Amazon doesn't provide you dedicated Amazon pay
UPI App like other Apps, which has some advantages and disadvantages. The disadvantage is
that they don't have a dedicated app for payments, but the advantage is Shopping time Amazon
pay gives you lots of discounts, Cashbacks. And you also make Mobile Recharge, tickets
booking, insurance All types of Bill payments like electronic. DTH, and many more. It's one
type of Digital Wallet. One of the biggest advantages use this Pyramidon pay provides you every
Transactions Rewards through Cashback. It's Remarkable

PROS:
Amazon Pay Balance (Help to Shopping time Discount)
Highly Secure and safe
Easy to use
Easy and Fast payments
Mobile Recharge. DTH, Electricity Bills, Bills, Travel, Insurance, and many Mores.

48
CONS:
No Dedicated UPI App

BHIM APP

BHIM app is the fifth most popular UPI apps in India. It is launched and managed by National
Payments Corporation of India (NPCT): BHIM (Bharat Interface for Money) is a UPI enabled
initiative to facilitate safe, easy & instant digital payments through your mobile phone. As of
November 2020, BHIM App has 0.31 million transactions in volume with Rs 13.87 Cr in
transaction value.This app comes from an official Indian government, the name of the app Bharat
Interface for Money (BHIM) BHIM app easy to use because it provides beautiful UT and UX.
BHIM app through your payment, recharge, bill payment, check balance, and more. This app
simple and friendly app doesn't add more features. Got app 99 9, safety. BHIM launched by the
Prime Minister of India, Narendra Modi on 30th December 2016 and developed by NPCI
(National Payments Corporation of India)

49
JIO PAY

Jio Pay UPI comes from India No company, Reliance. It's available in the Mijo app, not provided
a dedicated app for UPI. Jio Pay provides UPI payments, Recharge, bill payments, QR code
scanning, and many more. And give a passbook option so you can track your transactions
activities.If you're Jio users, then you can create Jiopay UPI through my jio app. Jio Pay is
something new you can try

MORE UPI APPS

50
At this moment, lots of UPI apps are available on the internet. Not possible to tell one by one
app. Every UPI app works in the same system. I provide 4 UPI app is best, trusted, most popular
and India most use UPI apps. Many UPI apps are available but not properly work, sometimes
failed, or payment pending. If you want to use more UPI apps, then see this app- BHIM SBI pay,
recharge, mobile network , and every bank UPI app you can use.
We recommend you use under these 4 UPI apps. I use personally Phonepe, Google pay, and
sometimes BHIM and Paytm. These apps do not only provide payment but also give you extra
features like recharge, bills payment, Online shopping, Booking bus flights, and many more
features.
So, we recommend the best UPI app phonepe because this app helps to your daily life. Phonepe
all in one app, you find everything.

MORE UPI APPS IN INDIA

Mobile network: Google Play Store Rating: 4.2, total of 1,439,427 reviews
WhatsApp Pay: Newly Launched with the world most popular App.
Kotak - Google Play Store Rating: 4.4, and 4,58,209 reviews.

51
Advantages of UPI& Transactions & payments
1.It is a fast, hassles-free and the cheapest way to money transfer which we can do from anywhere
and at any -time
2. UPI means simplified e-banking and online payment system.
3. It allows you to transfer funds instantly via your mobile phone.
4. You can use it for multiple purposes, including paying your utility bills or paying at the local
grocery shop.
5. You do not need to carry cash as the UPI system doubles like your digital wallet.
6. You do not need to enter the bank details for the recipient while sending money.
7. You can also receive money by sharing your UPI ID, which is usually your mobile phone
number registered with your bank A/C.

Disadvantages of UPI& Transactions & payments

Sometimes, there can be delays in payments, it can take up to 48 or more than that for the money
to get back to your bank A/C.
The UPI money transfer limit is currently, the UPI transaction limit is INR 1 LAKH. That means
the maximum amount you well be able to transfer in a single UPI transaction is INR 1 LAKH.
UPI is a deal for smaller fund transfer, when an amount is high then other modes of online
transfer are preferable
Another issue with UPI is that it is difficult to persuade customer to download the bank
application to their smartphone for a single payment interface because they are concerned about
online fraud.
Do not tell your personal information such as the data of birth, Thew UPI pin, and other
information to any other personal, so that your account will be safe.
If you want to transfer payment in the UPI then you can transfer up to Rs 10000 as much as
possible. You should send it one at a time if you need to send it more than once.
You must know that you have to transfer money from the Unified Payment Interface PIN is also
known as the UPI PIN, and it is a very small digit, like 4 to 6 digits while having a small digit it
is not safe, so make your payment carefully and its information does not let anyone else know.
It does not work on the slow of the interne Simple, secure way to send money recharge mobile,
pay bills, buy play store recharge code. Pay directly from your bank account with security of
google PIN and UPI PIN. Money made simple, free money transfers.
SCOPE OF THE UPI APPS & PAYMENTS
The services allows users of request to fund transfers or funds collection or respond to funds
collection for any of their linked bank accounts through mobile banking channels in secure
manner using BHIM APPS.

OBJECTIVES OF UPI APPS & TRANSCATIONS

The services allows users of request to fund transfers or funds collection or respond to funds
collection for any of their linked bank accounts through mobile banking channels in secure
manner using BHIM APPS.

52
 2 . Research Methodology

2.1 Research Design

METHODOLOGY

The data is based on both primary and secondary source of information. Data Collection Tool
for primary data structured questionnaire with a set of questions. The questionnaire related to
research study was circulated online to gather all relevant information. Convenient sampling
method was used on respondents who were surveyed through structured questionnaire.
Respondents include most of the college students in the region of Chandigarh who use digital
payments at various outlets and for inter-bank payments. Certain useful findings were made from
Secondary Data collected using previous research study on similar topics and other websites
Research methodology is the path through which researchers need to conduct their research. It
shows the path through which these researchers formulate their problem and objective and
present their result from the data obtained during the study period. This research design and
methodology chapter also shows how the research outcome at the end will be obtained in line
with meeting the objective of the study. This chapter. hence discusses the research methods that
were used during the research process. It includes the research methodology of the study from
the research strategy to the result dissemination. For emphasis, in this chapter, the author outlines
the research strategy. research design, research methodology, the study area, data sources such
as primary data sources and secondary data, population consideration and sample size
determination such as questionnaires sample size determination and workplace site exposure
measurement sample determination, data collection methods like primary data collection
methods including workplace site observation data collection and data. collection through desk
review, data collection through questionnaires, data obtained from experts opinion, workplace
site exposure measurement, data collection tools research designs is the arrangement of
conditions for collection and analysis data in a manner that aims to combine relevance to the
research purpose with economy in procedure. Research Design is the conceptual structure with
in which research in conducted, B constitutes the blueprint for the collection measurement and
analysis of data.
Research Design includes and outline of what the researcher will do form writing the hypothesis
and it operational implication to the final analysis of data. A research. design is a framework for
the study and is used as guide in collection and analysing the data. It is a strategy specifying
which approach will be used for gathering and analysing the data. It also includes the time and
cost budget since most studies are done under these two-cost budget since most studies are done
under theses tow constraints. What period of time will the study include?
 Sampling design
The study is un empirical un based on sample survey method. Sample was conducted. Among
people who are graduated and senior citizen.

53
2.2Data collection method

Primary research
Primary research is any type of research that you collect yourself. Examples include surveys,
observations, and ethnographic research. A good researcher knows how to use both primary and
secondary sources in their writing and to integrate them in a cohesive fashion
It is first hand data, which is collected by researcher itself. Primary data is collected by various
approaches so as to get a precise, accurate, realistic and relevant data. The main tool in gathering
primary data was investigation and observation. It was achieved by a direct approach and
observation from the officials of the company.

54
 3. Literature Review

1) UNIFIED PAYMENTS INTERFACE (UPI): A DIGITAL TRANSFORMATION IN

INDIA
Dr. Deepa Baliyan, Dr. Neha Singh

Abstract: Unified Payments Interface (UPI) in India as a unified payment solution to automate
and standardize the country's various payment platforms. The National Payments Corporation of
India (NPCI) developed UPI as an architecture framework with standard Application
Programming Interface (API) specifications to create interoperability and improve the customer
experience. UPI allows users to easily and securely transfer funds between bank accounts and
make merchant payments using various identifiers. This study aims to analyse the UPI payment
system in India and its potential future in the digital payment ecosystem. The objectives of this
study are to examine the various applications of UPI, to investigate the adoption and usage rates
of UPI in India, and to explore the future of UPI in digital payments. Data was collected through
primary and secondary sources, including online surveys and literature reviews. This research
paper reveals that UPI has become a popular payment option in India, with increasing adoption
and usage rates. The future of UPI in India looks promising, with continued growth, innovation,
and increased adoption expected. This study provides valuable insights into the potential of UPI
in the digital payment ecosystem and its role in India's vision of a cashless economy. In the
pandemic when social distancing is the most critical norm, the Unified Payments Interface
(UPI) is like a godsend. The instant real-time payment system has turned out to be the best
financial innovation post- Independence in India and has begun in earnest the process of
replacing the cash economy altogether. It has contributed its might to make the country one of
the fastest growing digital economies in the world.

According to the latest data compiled by the National Payments Corporation of India (NPCI),
which manages UPI, it has reported a threefold increase during the last fiscal (2020-21) in both
the number of transactions and the value. As of March 2021, the total volume has jumped to
2,732 million transactions, worth 25.04,886 crore. At the beginning of the fiscal, in April 2020,
the total volume stood at 999.6 million with the total value of transactions at ₹1.51.141 crore.

The number of banks that are live on UPI has gone up to 216 from 153 in April 2020. When the
platform began operations in April 2016, there were only 21 banks on board.

The two leading players-Walmart-owned Phone Pe and Google Pay-have continued to dominate
the UPI ecosystem. Phone Pe has topped the chart with 43.9% of the total UPI transactions
volume, accounting for 1,199.51 million transactions, with a value worth 22,31,412 crore. In

55
contrast, Google Pay has mopped up a 35% market share in March, with 957.01 million
transactions worth ₹2,01,185 crore. The third largest player, Paytm Payments Bank, posted
401.16 million transactions worth 243,221 crore.

Analysis

UPI has played an integral part in making Banking and Financial transactions seamless and easy
to execute in the new Digital India. All retail stores as well as small and large businesses have
adopted UPI and companies like Bharat Pe and Phone Pe have been at the forefront of the new
UPI revolution. UPI has promoted ease of business through its seamless and easy to use
payments interface. The transaction time that used to be a few days has now radically dropped
down to a few seconds due to UPI. B3cause of Lockdown every single household was able to
make contactless payments for everything right from their daily essentials like groceries to
electronics and other luxury purchases. UPI has become a notable innovation Financial
Technology and is an example of leading innovation for the entire world.

2) UPI-THE GROWTH AND ITS IMPACT ON DIGITAL TRANSACTIONS

Satya Prakash Sahoo*1, Ronit Kumar*2, Ranjith R*3, Swayam Verma+ *12341 Year Students,
PGDM, Xavier Institute Of Management & Entrepreneurship Chennai, Tamil Nadu, India.

Abstract: Payments and transactions in digital mode are transparent and reliable. This gives a
sense of trust to the people or the consumer. India being the second most populated country in
the world, it is important to look at the existing setup of digital payment systems and user
response in terms of transaction volumes that have been settled. This Paper analyses the growth
of UPI and its impact on Digital Transactions with respect to India. This paper gives an analysis
of how transactions through the Unified Payment Interface (UPI) increased significantly
between demonetization and lockdown, but it was during COVID-19 that UPI payments actually
accelerated and overwhelmed past growth.

Keywords: UPI, Digital Payments, Cashless, Security And Transactions.

56
3) A STUDY ON AWARENESS OF UPI PAYMENT - STUDENTS' PERSPECTIVE.

Kuhu Bose Faculty of Management and Commerce, PES University, Bangalore, India and,
Bujunuru Mrunalini PES University, Bangalore, India

Abstract: The Unified Payments Interface (UPI) is a digital payment architecture rolled out by
National Payments Corporation of India (NPCI) using advanced digital payment features with
mobile phone as the main device. This study is surveyed with 62 respondents using google form.
The objective of this study is to know the customer preference, level of satisfaction towards the
UPI scheme and to study the problems faced by customers in using UPI Scheme. The study also
reveals that users of UPI have a strong positive Satisfaction towards technology used in banking.

4) A STUDY ON DIGITAL MOBILE PAYMENT SYSTEMS ADOPTION AMONG

YOUTH IN CALICUT DISTRICT

Baidulloeva Zuhro Bakhtiyorovna 'University of Calicut Department of Commerce and

Management Studies, Master of Business Administration Tenhipalam, Kerala, India

Abstract: In an era marked by rapid technological advancements and digitalization, the way we
make payments has seen significant improvements, especially in India. Mobile phones, once
solely communication devices, have transformed into multifunctional tools that enable
entertainment, socializing internet access, and crucially, digital payments. With the rise of
financial technology (Fin-Tech), consumers in India now have excessive options for digital
payments, including debit cards, credit cards, mobile banking, and online banking, making
transactions more convenient and accessible.

However, challenges such as inadequate internet connectivity and cybersecurity risks pose
potential hurdles to this growth. Despite these challenges, mobile payment apps are gaining
popularity due to their convenience, low infrastructure requirements, and transaction fees.

This research focuses on the adoption of mobile payment applications among youth in the Calicut
district and aims to address questions related to usage preferences, challenges, and factors driving
adoption. Mobile payment apps serve a multitude of purposes, including money transfers, bill
payments, hotel reservations, book movie tickets, and even flight bookings. To conduct this
study, primary data was gathered from a sample of 150 users and subsequently analysed using
the Statistical Package for the Social Sciences (SPSS). The study employs a descriptive research
design and data was collected through a questionnaire distributed electronically. The collected
data were analysed by using various statistical tools such as Percentage Analysis, Mean, Standard
Deviation, Independent Sample test, and One-way ANOVA. In addition to this, data were

57
presented by using bar diagrams and tables to provide systematic and easy-to-analyse results.
The research contributes to understanding the factors influencing adoption and potential areas
for improvement. recognizing that digital payments are shaping the future of financial
transactions in India.

5) REVIEW ON UNIFIED PAYMENT INTERFACE ADVANCEMENT TOWARDS

DIGITALIZATION AND CHALLENGES FACED By Shubham Boke & Omkar
Harkare

Abstract: After Demonetization there was huge requirement for currency notes but government
was unable to provide required quantity of currency notes and also Indian government wanted
to promote cashless transactions. UPI is built over Immediate Payment Service (IMPS) for
transferring funds using Virtual Payment Address (a unique ID provided by the bank). Unified
Payments Interface is a payment system launched by (NPCI) which is National Payments
Corporation of India and is regulated by the (RBI) Reserve Bank of India which provides the
facility of instant fund transfer between two bank accounts online through payment apps. Digital
transactions by UPI have been made very easy. The UPI service is available 24X7. it is not like
RTGS and NEFT which doesn't works on holidays and non-banking hours. This will bring
tremendous efficiency in the system and help India become a cashless economy.

Keywords

Digital illiteracy, Online payments, cashless economy

58
 SOUERCE OF DATA

PRIMARY DATA-

The primary data is defined as the data, which is collected for the first time and fresh in nature,
and happens to be original in character through field survey The data collection method which
is used in this research is questionnaire. Here the data are systematically recorded from the
respondents.

SECONDARY DATA-

The Secondary data are those which have already existed and are already collected by someone
else and have been passed through statistical process. The main sources of Secondary data are
websites, articles, journals.

Structure of questionnaire

Interpretation:-
According to the data collected from respondents it is observed that 53.6% are females and
46.4% are males who are using UPI payments app. Thus, there are more males who are using
UPI apps as compared to females.

59
Interpretation:-
As we can see in the above graph there Is most response are to be collected from the age group
of 18 to 30 it is 89%, the least response is collected from age of 31 to 45 that is 3.6% and the
response is collected from age 45 to 60 is 7.1%.

Interpretation:-
As per the above graph the most people are highly educated from graduated students is 50%,
then it is 10 to 12 is 28.6% , master or post graduation is 17.9% and doctorate level is 3.6%.

60
Interpretation:-
According to the data collected from respondents it is observed that 51% are students , 17.9%
are from government and private sectors and response is collected from business freelancer is
7.1%.

Interpretation:-
As we can see on the above graph 85% people are use google pay and 14.3% are use phone pay
and none on them are use paytm and bhim on the above response. On the above graph most of
the people are prefer to used the google pay instead of all this payment method.

61
Interpretation:-
According to the data collected from respondents it is observed that 50% respondents are using
less than 6 months or 6 months to 2 years 32% people are using and 17.9% people are using upi
more than 2 years. Thus, it can be said that due to Demonetization and COVID-19 pandemic
users were more attracted towards cashless payments for safety and security purposes.

Interpretation:-
As we can see on the above graph the most people are like the over all services and quality offer
by phone pay it is shown in graph that 78.6% people are gives excellence and only 21.4% people
are dislike the overall services and quality offered they give 1 is very bad.

62
Interpretation:-
As on the above graph 71.4% people are said that the success ratio transaction using phonepe
rate 5 is very high.

Interpretation:-
As we can see on the above graph 78.6% people has opinion that it is very easy to use phonepe
or phonepe business app they gives rate on that is 5 is very easy and 21.4% people has opinion
that it is very hard.

63
Interpretation:-
As on the above graph 67.9% people are satisfied on the cashback and offers received after
transactions and they give 5 as they said it is very good and 32.1% said very bad because they
can’t use overall offers recomend at the time of phonepe cashbachk and transactions.

Interpretation:-
Respondents were asked to rate their level of satisfaction with the Phonepe's store listing feature
and the categories listed in it on 67.9% is very useful and 32.1% is less useful. as on that more
people are satisfied on the features and categories listed.

64
Interpretation:-
As on the above graph the most people are said its happen may or may not be issues are
happening on the time of transaction and it do not long time to resolve the issue, 35.7% people
are suffer issues at the time of transaction and it takes too much long time to resolve and 21.4%
people disagree on that.

65
 Recommendations

1. A very big plus with UPI is that cash sent or received goes directly into a bunk account. In
digital wallets such as Paytm, payments and cash backs stay in the wallet. Also these typically
involve a fee for moving the money to a bank account. This fact needs to be properly
communicated to prospective customers. The more people start understanding this, more shifts
would be seen towards UPI payments.
2. UPI adoption and extensive use for merchant payments needs to be targeted. According to
figures from chief digital officer, YES BANK, there is an ecosystem of around 40 million
merchants in this country who are not using electronic payments. They need to be targeted.
Mobile wallets became successful when small merchants, tea vendors and kirana
(neighbourhood) shopkeepers started accepting them and similar market targeting should be
done for UPI to make it a game changer.
3. The facts and figures from NPCI and the research insights from this research suggest that more
volumes could be generated out of the individual-to-merchant payment space. This could be for
rent payments, bill payments, contributions to chit funds or mutual funds esc
4. The initial growth in usage of UPM was mainly being driven by demand that arose pest
demonetisation, but to sustain this growth the industry needs to create multiple use- cases for
UPI payments just like digital wallets have managed to score points by adding multiple me-cases
5. UPI should come up with bigger value proposition for merchants for example, loyalty
programmes, post-purchase analytics, merchant ratings, systematic savings etc which will
manage to take UPI to the peer to merchant space.

66
SUMMARY & CONCLUSION
Findings

If you are sending money from UPI application, then receiver should have to register to UPI application
at another end. Otherwise, you cannot able to send money by mobile number, then you can send money
by entering account number and If sac code
 Till now UPI supports only for Android users se other users should wait for NPCI for developing
software for other platforms
 UPI is still in starting stage and common problems like server issues are more There is no
separate customer care line if any problem in payments like payment in pending and payment
is failed but money is not refunded
 UPI is in initial stage, so most of the Banks are adopting this technology and this leads
 To problem in maintaining servers 24 hours
 UPI mainly targets the start phone users and the number of smart phones are increasing day by
day but the Digital literacy is too less. This will affect the UPS
 Till now, there is no transaction charge but for maintaining servers and for other infrastructure
facility Banks may start applying charges
 UPI mainly requires Internet connection but in India Data connection is everywhere available
Single Application for accessing different bank accounts
 Use of Virtual ID is more secure, no credential sharing
 Single click authentication.
 Raise Complaint from Mobile App directly
 Seamless fund collection faun customers-single identifiers
 No risk of storing customer's virtual address like in Cards
 Tap customers not having credit debit cand
 Suitable for e-Com & in-Com transaction

67
 Conclusion

UPI developed the m-payment technology by facilitating mobile phone to be used as a main
payment device for giving and accepting payments. In contrast to all of payment systems it can
he say that UPI is the most advanced payment system in the world UPI payment system allows
money transfer between any two bank accounts by using a smart phone. It allows a customer to
pay directly from a bank account to different merchants, both online and offline, without the
hassle of typing credit card details, IFSC code, or net banking wallet passwords. It aims to
simplify and provide a single interface to money transfers easy, quick and hassle free. These
features of UPI motivates the respondents of service sectors to adopt the tool and the above study
revealed that there also a significant difference found between the gender towards the adoption
of UPI. The use of smart phones, the availability of an online verifiable identity, universal access
to banking and the introduction of biometric sensors in phones will proactively encourage UPI
Transactions and findings revealed that the respondent have positive attitude towards the UPI
transaction for ushering in a less-cash society in India
Despite all the claims of government, the most preferred mode of payments remain cash & cards
on an average. Although usage digital payments has increased manifolds by the people in all age
groups, but more awareness needs to be spread especially in field of UPI. The frequency of
digital payments is highest in the age groups of 20-35 and least in above 40. People are although
aware of UPI hat are not as inclined towards it as they are so mobile wallets and debit credit
cards. The new technology faces challenges that need to be addressed and taken care of in order
to promote it in future. In case of UPI the front-end platform is to be designed by the banks. If
hanks fail to work effectively on this then consumer adoption of UPI will be difficult more likely
because private mobile firms have sincerely invested in creating merchant network to ensure
smooth and failure five payment process. Moreover they have also included cash backs and
discounts to attract customers at least but for a trial usage.
Already the mobile wallet companies of India have a larger customer base compared to existing
bank supported apps combined. If UPI fails to deliver its promise in creating a one stop solution
for financial payments then banks will loose their revenue to private find each companies. The
UPI allows consumers to transact directly through their bank account with a unique UPI identity
which syncs to Aadhar's verification and connects to the merchant for the settlement and lets the
issuing bank to close the transaction. In a single swipe the transaction is complete without any
middlemen (like Visa and Muster Card switch) to facilitate the transaction. This also has been
possible because India is the only country which has been able t register more than one billion
of its population (DNA, 2016) on the identification database called Aadhar. Thus, a robust
Aadhar platform is one of India's superior achievements which will aid the country to digitalize
its payment services through LIPI
 From above study, it is concluded that UPI will definitely change the are transacting now and
transforming into digital payments where each person's smart phone will be primary device for
all payments
 UPI is in initial stage, When UPI is fully operational means when all the banks join the UPI then
it would be wide beneficial for banking sector and customers in terms of sending and receiving
money
68
 We knew that in recent time, there is enormous growth in smart phone users and penetration of
internet in rural services. This leads big potential for adoption of UPI by Indian customers
 UPI creates convenience of transacting without knowing Bank details means knowing phone
number or virtual address with high security and simple process. From all above paints we can
conclude that UPI will gradually end the cash payments and reducing circulation of currency
notes. This will lead to a transparent system and a cash less economy Currently India is
developing at the rate of 6 to 7% we know that cashless payment will definitely reduce or stop
the burden of circulating hard cash throughout the nation.

69
 References

 https://economictimes.indiatimes.com/tech/technology/npci-enforces-new- märket-share-rules-
on-upi-for-google-pay-phonepe-paytm- others/articleshow/81701508.cms

 https://www.npci.org.in/what-we-do UPI UPI-ecosystem-statistics

 https://www.phonepe.com/pulse/

 https://www.phonepeethics.com/content/dam/phonepe

 ethics/documents/Phonepe CodeofConduct.pdf

 https://pdfcoffee.com/phonepe-startup-projectentrepreneurdocx-pdf-free.html

 http://jjamtes.org/gallery/503%20dec%20jjmte%20-%201349.pdf

70
 WEBLOGRAPHY

SITES-
 rnpci.org.in
 www.wikipedia.org.
 investopedia.com.
 www.bhimupi.org.in
 onmanorama.com and many more

OTHERS-

 Questionnaire
 Feedback form
 Times of India and other news report
 Govt reports

71
 BIBLIOGRAPHY

To make this project I have help from the following sources:

 Research methodology: Dr K Venugopalan
 Modem banking: Dr K Venugopalan, Dr Abdul Assis Koroth
 Upipayments.co.in

72
 5. Questionnaire

A study on merchant satisfaction with Phonepe’s UPI payment system under the
geographical are

1) Gender

A. Male

B. Female

2) Age

A. Below 18
B. 18 to 30
C. 31 to 45
D. 45 to 60
E 60 or more

3) Highest Educational Qualification

A. 10th or 12th Pass

B. Graduate or Diploma Degree
C. Masters or Post Graduate Degree
D. Doctorate Level

4) Occupation

A. Government or Public Sector Unit B. Private or Corporate Employee

B. Private or Corporate Employee

C. Business or Freelancer
D. Student

5) Which of the following UPI Payment methods are used by you?

A. UPI Payment Method

B. Paytm
C. Google Pay

73
D. Mobikwik
E. Airtel Payments Bank
F. Bank UPI Payment Service.
G. Other (Please Specify)

6) Since how much time are you using Phonepe for accepting UPI payments?
A. Less than 6 months
B. 6 months to 2 Years
C. More than 2 Years

7) On the Scale of 1 to 5. How will you rate overall services and quality offered by Phonepe?
1 is Very Bad
5 is Excellent

8) On the Scale of 1 to 5. How will you rate success ratio of transaction using Phonepe?

I is Very Low
5 is Very High

9) On the Scale of 1 to 5, How will you rate Ease of Use with Phonepe or Phonepe Business
App?
I is Very Hard
5 is Very Easy

10) On the Scale of 1 to 5, How will you rate your satisfaction level with Phonepe's cashback
and offers received after transacting?

I is Very Bad
5 is Very Good

11) On the Scale of 1 to 5, How will you rate your satisfaction level with Phonepe's store listing
feature and the categories listed in it?

I is Less Useful
5 is Very Useful

12) Have you faced any issues while using Phonepe Business App and the resolution time took
much longer than expected or committed?

74
A. Yes
B. No
C. Maybe

75