UPI (Unified Payment Interface) offers several advantages over other digital payment systems in India.
The benefits of using UPI:
UPI is instant. Transactions are processed in real time.
UPI is convenient. You can use it to make payments from your mobile phone.
UPI is secure. Your payments are protected by two-factor authentication.
UPI is free to use. There are no charges for using UPI.
Let's compare UPI with some other popular digital payment systems in the country:
UPI vs. Mobile Wallets:
UPI: UPI allows users to link their bank accounts directly to the UPI app and make payments using their account balance. It offers instant transfers and is universally accepted across various merchants.
Mobile Wallets (e.g., Paytm, PhonePe): Mobile wallets require users to load money into the wallet from their bank accounts. Payments are made using the wallet balance. Mobile wallets may have limitations in terms of acceptance and may require additional steps for transferring wallet balance to a bank account.
UPI vs. NEFT/RTGS:
UPI: UPI offers real-time fund transfers between bank accounts. It operates 24/7, including weekends and holidays. UPI is also more convenient and user-friendly compared to NEFT/RTGS, as it eliminates the need to enter complex bank account details.
NEFT/RTGS: NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement) are traditional electronic fund transfer systems in India. They operate during specific banking hours, and transactions may take some time to settle. NEFT/RTGS require users to enter detailed bank account information, which can be prone to errors.
UPI vs. Debit/Credit Cards:
UPI: UPI allows users to make payments directly from their bank accounts using a UPI ID or scanning a QR code. It offers a seamless and secure payment experience, without the need for physical cards.
Debit/Credit Cards: Cards require users to carry physical cards and enter card details for each transaction. They are subject to card limits, expiry dates, and security risks like card skimming. Card payments may also involve additional charges like transaction fees.
UPI vs. USSD-based Systems:
UPI: UPI apps provide a user-friendly interface with advanced features and transaction history. UPI operates through mobile internet connectivity and offers a wider range of services beyond basic fund transfers.
USSD (Unstructured Supplementary Service Data): USSD-based systems operate through basic feature phones by dialing specific codes. They have limitations in terms of user experience, features, and accessibility compared to UPI apps.
UPI vs. IMPS:
UPI: UPI incorporates the features of IMPS (Immediate Payment Service) and offers additional advantages like simpler identification through UPI ID, QR code integration, and seamless interoperability across different UPI apps.
IMPS: IMPS is an older fund transfer service that allows immediate transfers between bank accounts. However, it lacks some of the advanced features and convenience offered by UPI.
While each digital payment system has its own merits, UPI has gained significant popularity in India due to its simplicity, real-time transfers, interoperability, and wide acceptance.
UPI offers a comprehensive solution for digital payments, combining the convenience of mobile wallets, the security of bank transfers, and the ease of use of QR code payments.
Here is another take on comparison of UPI with other digital payment systems:
Here are some ways in which UPI compares to other digital payment systems in India:
UPI is the most widely used digital payment system in India, with many consumers preferring it over other options1.
UPI promotes competition among fintechs and banks, which can benefit consumers and retailers1.
UPI has lower fees for traders compared to credit cards1.
UPI has flaws, such as lower transaction success rates compared to payment systems in developed markets and slow financial-data sharing1.
The adoption and success of the digital rupee may take some time, as UPI and net banking are already popular and users are satisfied with them2.
It is possible that UPI's benefactor, the National Payments Corporation of India (NPCI), aims to establish a homegrown alternative to SWIFT3.
References: 1 economist 2 indiatimes 3 forbes
UPI is a secure, convenient, and free way to make payments.
It is the most popular digital payment system in India.