UPI is the term used in the context of fund transfer, the full form of UPI is Unified Payment Interface. In case of UPI one does not need to know the bank account number and IFSC code of the receiver of the money rather one requires virtual payment address of the receiver in order to transfer the funds instantly. In order to understand more about this term let’s look at the advantages and disadvantages of UPI –
Advantages of UPI
Minimal Charges and Instant
The biggest advantage of Unified Payment Interface is that there are no or minimal charges on the transactions done through UPI. So in case of NEFT and RTGS charges are in the form of bank commission and GST on that commission which is not the case with Unified Payment Interface. Also, funds are transferred instantly from one bank account to another bank account which is not possible in case of other modes of transfer like RTGS which takes 30 minutes to 2 hours for fund transfer or NEFT which takes 1 hour to 4 hours for fund transfer.
No Need to Fill Details
Another advantage of UPI is that one does not need to fill the various details like ATM card number or account number or IFSC code rather one has to give only the virtual address to which funds have to be transferred. The virtual address can be in the form of ABCD@nameofthebank, so for example, if you want to transfer funds to your friend Mahesh and his account is in HDFC bank and his virtual address is Mahesh@HDFCbank than you have to input this virtual address and funds will be transferred instantly to his account.
No need for Registration and always Available
In case of other modes of online funds transfer registration of new payee takes time while in case of UPI there is no need for registration of payee and one can transfer funds to the new payee instantly and also one can transfer funds at any time that is Unified Payment Interface is available 24 hours and also funds can be transferred even on Sundays and when there is holiday in the bank.
Disadvantages of UPI
In case of UPI there is transaction limit which varies from bank to bank but in the majority of banks, it is not more than 1 lakh while in case of other modes of transfer like internet banking, RTGS there is no limit and an individual can transfer any amount which he or she wants. Hence in simple words, UPI is ideal for smaller fund transfer, when an amount is high than other modes of online transfer are preferable.
Requirement of Internet and Smartphone
Another problem with Unified Payment Interface is that since there is a new way of fund transfer many people are reluctant to use because of unknown fear associated with new things and also using smartphone and virtual address for funds transfer will be out of question for majority of the population of the country as majority of the population still do not have internet and smartphone which is necessary for transacting through UPI.
Difficult to Convince the Customers
Another problem with UPI is that it is difficult to convince the customer to install the bank application in the mobile for Unified Payment Interface as the customer are afraid of online fraud and for them, terms like virtual address sound very technical and they will not even listen about the benefits of Unified Payment Interface.
As one can see from that UPI have advantages as well as disadvantages, but looking at pros of UPI it is definitely better than other modes of fund transfer and if one can overlook cons of UPI than this method of funds transfer will change the way through which people transfer funds online.