The Unified Payments Interface (UPI) has been a major player in helping convert India into a cashless economy. According to the latest data published by the National Payment Corporation of India (NPCI), by July 2024, UPI transactions in the country stood at Rs. 20,00,000+ crores.

However, despite UPI's growing popularity, many people do not know how to make UPI payments. Here, we will explain how you can set up a UPI account and easily make cashless payment

• UPI is a payment method launched in FY2016-17 and helps individuals transfer money between banks instantly.
• UPI PINs help individuals authorise transactions, while UPI ID acts as a virtual address and helps them send or receive payments.
• Setting up a UPI account is very simple and can be done with the help of various authorised mobile applications.

UPI was launched in FY2016-17 as a new payment mode to help individuals instantly transfer money between different banks. UPI payments can be done through particular mobile apps and designated mobile wallet applications. The UPI money transfer provision is available to individuals 24/7. 

Similar to an ATM PIN, a UPI PIN is used to authorise a transaction. However, the UPI ID has a different purpose than the UPI PIN. The UPI ID enables a user to send or receive money through any UPI platform; think of the UPI ID as a virtual address. 

Listed below are the steps that you need to follow to set up your UPI account.

Step 1:

➔ You should first download an NPCI-approved UPI app from the Google Play Store or the App Store.

➔ This could include BHIM, Google Pay, or the official mobile application of your bank.
 

Step 2:

➔ Open the application and enter the mobile number linked to your bank account.
 

Step 3:

➔ Allow the permissions that the app asks for you to enable.
 

Step 4:

➔ You will receive an OTP on your registered mobile number.

➔ Enter this OTP to proceed to the next step.
 

Step 5:

➔ In this step, you will be asked to set a PIN.

➔ This will act as the login password for your account.
 

Step 6:

➔ Tap on the 'Add Bank Account’ option.

➔ Choose your bank from the list provided.

➔ This step can be skipped if you are already using your official bank application.
 

Step 7:

➔ Start by providing your card details.

➔ After this, you can easily set your UPI PIN.

Once all these steps are completed, the UPI ID is obtained to carry out payments through the app.

There are three ways via which you can transfer funds:                                                                                                                                                                              

1. Entering the receiver's UPI ID
2. Scanning a QR code
3. Entering the receiver’s bank details which includes their account number and IFSC code

Four main entities are involved in the UPI transaction process:
 

National Payments Corporation of India (NPCI)

• NPCI is the main body that maintains the fund settlement systems and overlooks digital payments in India.
• In UPI, the NPCI acts as a middleman between the banks and the payment service providers or PSPs.
• It makes sure that all payments are sent to the right destination.
• PSPs include mobile apps that let users carry out UPI transactions, like BHIM or Google Pay.
  
  

The sender's bank

• UPI transactions enable the transfer of funds from the sender's bank to the receiver's bank account.
• Money is debited from the sender’s banks when NPCI places a request.
• The bank then has to respond to NPCI when the debit is successful.
  
  

The receiver's bank

• Upon NPCI’s request, the receiver’s bank has to credit the funds into their account.
• Once the credit is successful, the receiver’s banks have to send a credit response to NPCI.
  
  

Payee PSP

• Payee PSP is the payment gateway that merchants use to carry out person-to-merchant or P2M transactions.

UPI has truly made a huge difference where digital payments are concerned, Not only has the process become seamless, but UPI transactions are also secure when done through the right applications or platforms. The process of opening a UPI account is also very easy and can be done on the go with the help of NPCI-recognised applications.

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