The new way of money transfer, The UPI has many benefits over the existing payment methods. Because of its obvious benefits, the experts consider it a revolutionary innovation. In RBI governor Raghuram Rajan’s word, The UPI is whatsapp moment for banking. UPI is one of the most advanced method among all the digital payments.
The UPI is a payment mechanism which allows instant money transfer without the bank details. Instead of bank account number and IFSC code, the virtual payment address is used to pay through the UPI. Let us explore the benefits of UPI.
11 Benefits of UPI
1. Cheapest Way of Money Transfer
The UPI is the cheapest method of fund transfer. The NEFT charges minimum Rs 2.5 for a transfer, the IMPS charges minimum Rs 5. But the UPI charges too less to believe. It costs less than 50 paise for a transaction through the UPI.
Becuase of this low cost, the UPI has the potential to promote the non cash transactions of small amounts.
2. It Makes you Free from Cash
There are many ways of transactions which has decreased the cash transactions. The card payment, net banking and mobile wallets are widely used. However, we rarely use the card or netbanking for small transactions such as payment to your neighborhood grocery or payment to a vegetable vendor. In fact, it is not feasible for the consumer as well as the shopkeeper.
But, the UPI makes small transactions feasible. The smooth and low cost transaction had made it feasible for small shopkeeper and consumer as well. Once, you start using the UPI, you need less visits to the ATM.
3. No Need to Give Details
Most of us avoid using online transaction and card payment because it ask for the bank account details. For card transaction, you give card number, validity period and CVV number. Whereas net banking transaction expose your bank account details. For this reason, the card and online payment is not as much popular. People still prefer cash.
But the UPI solves this problem. The payment through the UPI does not require the card details or bank account details. You have to only give the virtual payment address. the virtual payment address is similar to our email ID. e. g Ramesh45@icicibank, 9876543210@axis. It is easy to remember this ID.
4. More Secure
Not everyone uses the card for payment. Not everyone uses the netbanking for the online payment. People are reluctant to use the non cash methods because of the security concern.
What if someone overlooks your PIN while you punch it at the POS terminal. What if the website steal your credit card data and use it for the international transaction.
The UPI has minimized this concern. Actually It is more secure than the present mode of transaction. In the transaction through the UPI, you never share you bank account details. You do not enter your credit card number or CVV. You only give a virtual payment address which does not give any clue about your bank account.
Also the authentication takes place at your smartphone. It is done by punching the two different PINs. You can easily make it discrete while typing at your smartphone.
5. Instant Transfer
The UPI is based on IMPS platform. Thus It works 24 x7. You can make payment any time. There is no restriction of holiday or odd hours. The bank strike will also not affect the UPI payments.
6. One UPI App Many Accounts
After the UPI mobile app, you do not need multiple apps for multiple bank account. A single UPI would serve for many bank accounts. You can link many bank accounts in a UPI based app.
Because of the multiple accounts at one place, you can pay by using any of the account. You can also set the default account for the payment.
5. Choose Any UPI App
You also get liberty to choose any UPI based app from the google play store. It is not mandatory to use the App promoted by your bank. Your bank account may be with the ICICI Bank, but you can use the UPI app of the axis bank.
Before using an app, check carefully the interface and ease. Also, use those app which gives you desired Virtual payment address.
Note, with the change of App you have to get a new VPA, thus it is not advisable to change it frequently.
6. Immediate Registration of Payee
The registration of new payee for the online fund transfer takes some time. This time varies form half an hour to 24 hours. However, the UPI doesn’t have such waiting period. You can instantly transfer fund to a new payee.
7. Money Collection Facility
If you have given a service or product to someone and want the payment, what would be way to ask for the money? You will send a person or make a call.
You would agree that getting money from a party is always tough. There can be numerous excuses. But, the UPI would give more power in the hands of biller and It would not be easy for the client to give excuses.
The money collection facility of the UPI sends a message directly to the party. This message is sent via the bank. It only asks approval for the payment. If the client approves, the money would be remitted instantly. If the client does not approve, it means he/she does not want to pay. Now the biller can deal it differently.
8. Avail COD Without Paying Cash
We love online shopping till it does not ask money upfront. That is why 80% people opt for cash on delivery. The apprehension is simple, what if I do not get delivery. What if I get a packet of stone instead of the mobile phone. So, why take risks, go for the cash on delivery.
However, sometimes, you don’t have enough cash at your home. If it is a big purchase, you have to rush to the ATM before the delivery boy comes. The UPI ends this hassle.
You can go for the cash on delivery but you are not required to keep cash at your home. You can pay it instantly using the UPI fund transfer.
The Online seller would use the fund collection facility of UPI. Subsequently, You would get a message for the payment approval. You can hold the approval till the delivery. As you get the product, Approve the payment. The delivery boy would get the message immediately of the payment. The cash on delivery is done without using the cash. In actual sense, It is pay on delivery.
9. Cheaper Alternative of POS Machine
It is difficult to pay through the card in small cities. Most of the merchants don’t have the card swiping machine. Let me tell you that this machine is called as the POS terminal.
So, small merchant don’t keep POS terminal because it is costly. They have to pay for the machine. Along with this they have to pay the service charge for each transaction. It varies from 1.25% to 2.5% of the transaction value.
You would have also faced the situation when vendor ask the service charge from you. It happens in a competitive market. In fact keeping POS terminal is not very beneficial for small traders.
But, UPI would do the same work with negligible cost. AS UPI operates through the smartphone, anyone can collect money without spending for the machine. Also, the transaction cost is mere 50 paise, It is very low compared to the POS terminal.
11. UPI would Replace Many Digital Wallets
Digital wallet has eased the online payments. The mobile recharge, rail tickets, online shopping has become very smooth because of the digital wallets. But the number of such wallets are increasing. Paytm, Freecharge, Flipkart and IRCTC, Everyone want you to keep the digital wallet. So it become hassle to maintain more than one wallet.
The UPI would end this hassle as well. The payment through the UPI is as easy as payment through the wallets. But a single app is enough to pay anywhere. Also, the UPI does not ask money in advance. Rather, your money remains in the bank account and keeps earning the interest. Digital wallets don’t give any interest.
So, I have told you the benefits of UPI. You can also learn the upcoming features of the UPI in my another post. Now, it is your turn to avail this facility immediately. Download the best UPI App, register it and do the first transaction.