From a roadside shoemaker to a renowned Nike showroom – every business has UPI Payments as one of its primary payment methods. In FY22, the total worth of UPI transactions accounted for about 86% of India’s GDP. While we’re not a truly cashless economy yet, UPI has certainly helped in making it partially true at least.
In this blog, we’ll take a look at what is UPI payment, how UPI payments function, how it’s changing digital payments in India, and lastly, how you can integrate a UPI API to your business. Though note that the blog is sponsored by Hatio Payouts, a company offering UPI API solutions.
What is UPI API?
UPI stands for Unified Payments Interface. As the name suggests, this technology is known to house multiple bank accounts in a single app and allow instant digital payments from one bank account to another. The beneficiary doesn’t necessarily have to use the same UPI app or any UPI at all. Money can be transferred through bank details, via a unique UPI ID, or using a unique QR code. It’s a single step process and requires zero manual input.
Let’s take a look at how UPI emerged and changed online payments in India for the better.
The UPI Revolution in India
The UPI system was introduced in India on 11th April 2016 by NPCI, ie. National Payments Corporation of India. And by luck or otherwise, this launch was in proper sync with ‘Reliance Jio’s Welcome Offer’ which gave people free 4G internet services for 7 whole months. This revolution evidently led to more internet and smartphone users – the main requirements for being able to use UPI.
The official UPI app by the Indian government – BHIM UPI – helped in gaining people’s trust since scepticism towards digital payments was still quite common in those years. Some other government initiatives like Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA) also helped in increasing UPI’s reach to tier 2 and 3 cities. The 2020 pandemic gave it the final push it needed to urge people to go cashless.
Thanks to all this, today UPI has become the go-to payment solution for the majority of people throughout the nation. As of June 2023, there had been UPI transactions worth 14.7 trillion INR so far. Over 458 banks are available on UPI and the total number of transactions is over 83 billion.
Today many countries are looking to have this revolutionary technology in their country after its success in India. To cater to this demand, a new unit of NPCI called NPCI International Payments Limited has been introduced. This unit is in agreement with a number of countries including the UAE, Mauritius, Nepal, Singapore, France, the UK, and Bhutan to increase the use of UPI globally.
Global Payment Services such as Worldline are also working with NPCI to implement UPI across Europe.
Advantages of UPI API Integration
All these UPI success stories beg the same question: what are the advantages of UPI API? Let’s explore in detail.
- One app, Many accounts: As mentioned earlier, a single UPI account can accommodate multiple bank accounts. So no matter which account you want to use, the app used to make the payments stays the same.
- Instant Payouts: The transactions made on UPI barely take 5 seconds to go through. Thus, UPI can be used to make quick money transfers to anyone at any time.
- Ease of use: The learning curve of using a UPI app is really low. The whole process takes no more than one step and there’s no need for manual inputs with every payment. All these factors make UPI easy to use for everyone.
- Privacy: The amount of information we’re giving or receiving from a person while making a UPI transaction is negligible and nothing that can put us under risk. A simple QR or UPI ID can do the trick without needing any bank details.
- Flexibility: Debit cards were primarily used for digital payments in India before UPI but they were not useful for making small transactions. UPI on the other hand can be used to make payments of as low as a single rupee.
These factors collectively make UPI the primary payment solution of millions of people.
UPI Payments Explained
The UPI transactions are majorly either P2P (person-to-person) or P2M (person to merchant). The working mechanism of both, however, is similar. Suppose you want to make a UPI payment to a merchant. You scan their QR code that holds all of their necessary details. The UPI you’re using will then forward it to a chosen PSP, ie. Payment Service Provider. These are third party apps that allow businesses to accept online payments. Hatio Payouts is one such example.
Coming back to the process, the PSP will take the request to NPCI and finally NPCI will communicate it to your bank. The money transfer will happen along the same pathway.
Though it may seem like a long process, it’s really quick in action.
Though it’s not just speed that differentiates UPI from other payment methods, there’s a lot more to it. Let’s understand.
- Transaction fee: First and foremost, UPI doesn’t charge any extra fee on transactions (yet). A few platforms like Paytm have now implemented a one rupee fee on all transactions, however the majority of it still remains free. This is one of the biggest factors that help UPI stand out from its competition.
- Virtual Payment Address: UPI uses a Virtual Payment Address or VPA to share a person’s sensitive information like bank details. On the other hand, regular digital transfers share this information directly – exposing it to frauds.
- Wide range of applications: With UPI, we get access to features like digital wallets (which are optional), splitting payments, automating payments, and much more. Thus, the use cases here are a lot more than any other form of digital payment.
Online Payments in India
UPI has now undoubtedly changed the way we make payments. The technology is constantly being improved to make it even more accessible and useful. Take the UPI QR codes for example. They started as timid paper stickers, turned into plastic standees later, and now function with Sound Boxes with SIM. This feature alone led to a lot more merchants using UPI than before as it instantly confirms when a payment has been made.
Some government initiatives like the BHIM Aadhaar Merchant Incentives scheme, BHIM-UPI Merchant On-Boarding scheme, and Merchant Discount rate (MDR) Reimbursement scheme also helped small businesses to adapt to UPI payments.
As the CEO of NPCI, Mr. A.P Hots says, “UPI is meant to be a unifying force. When we started it, our target was to get an active customer base of 500 million.” As of September 2023, the number was 330 million; meaning that they’re already halfway through their goal.
Hatio: Your UPI API Solution
If you’re a business owner looking to integrate UPI API to your business, you can take it ahead with Hatio Payouts. Hatio will work as a link between the customer’s UPI app and NPCI as mentioned earlier while explaining the working of a UPI system.
Hatio Payouts is a fully owned subsidiary of Billdesk – India’s largest payment gateway. Thus, we take it as our responsibility to provide you a seamless payment experience. The process of integrating a UPI API with your business using Hatio is as quick and simple as it can be. Leverage our easy-to-integrate API, regular analytics reports and 24*7 available customer service to scale your business.
How to Get Started with UPI API
(step-by-step guidance on how businesses can get UPI API access through Hatio)
The Future of Digital Transactions
As convenient and efficient as they are, NPCI is still working to improve UPI. The recent announcement of Google Pay Lite is an example of the same. Users can now use UPI Lite for low value transactions. There won’t be a need to enter a PIN again and again, making the process even easier.
Some other upcoming developments are UPI 123 for making payments without any internet and the linkage of UPI and credit cards.
Conclusion
To sum up, we can say UPI has totally changed the scenario of digital payments in payments not just in India but even globally. It is accessible, easy, cheap and fast – everything that one can expect from a payment solution. For businesses especially, UPI has proved to be a game changer and has now become not just a feature, but a necessity.
To not fall behind this rising trend, book a free demo call with our experts to integrate a UPI API to your business with Hatio Payouts.
FAQs about UPI API Integration
How to integrate UPI API?
How does UPI integration work?
Is UPI an open API?
Yes, UPI is an open source API that functions on top of IMPS (Immediate Payment Service) regulated by the Reserve Bank of India.
How is UPI API different from traditional payment methods?
UPI API is faster, cheaper and more flexible as compared to traditional payment methods. It also has a wider range of functionality which opens it up to a lot more use cases than the other methods.
Is UPI API secure for online transactions, and how does it ensure data protection?
Yes, UPI API is secure for online transactions since it uses a number of security measures such as two-factor authentication, advanced encryption protocols and Virtual Payment Address (VPA).
How does UPI API simplify the payment process for customers?
With a UPI API, no manual inputs like bank details are required since users can use a QR code or VPA to make payments. The process is a single step and takes no more than a couple of seconds. Thus, customers can now pay anyone instantly at any time using their smartphones.
Are there any specific industries that can benefit the most from UPI API integration?
Yes. Industries like e-commerce benefit the most through UPI API integration. This is because customers now prefer to use UPI for all their online shopping so having a UPI API in place means securing a huge customer base, including tier 2 & 3 cities as well.
