Forget e-wallet. What is your UPI ID?

It's quite a few years since e-wallets became popular. Most banks and e-commerce players have one. Then there are those like Paytm and MobiKwik.

These e-wallets are like the physical wallets that we carry with us. Transfer online money from your bank to the e-wallet app, and when you have to make a payment, transfer money from the e-wallet. 

But frankly, I never understood, why one should put money in the e-wallet from the bank, and then spend it, when we can make payment directly from the bank? Why move money twice? I rarely used e-wallets; for many years I have been using either debit card or credit card.

Unified Payments Interface

Now we are hearing more and more about UPI. What's that?

It's the abbreviation for Unified Payments Interface. It's a system that connects your bank/banks to a UPI mobile app. When you use an UPI app to make a payment, money gets deducted from your bank and gets credited to the receiver's bank account. 

In short, a bank account to bank account transfer via a UPI app. The best part is you don't need to know the recipient's bank account details. 

PhonePe, a Bengaluru-based company was one among the first to take the lead in this. The app was launched in December 2015.

In December 2016, the National Payments Corporation of India, launched a UPI app, under the name Bhim.

And day before yesterday, Google launched Tez.

Why I prefer UPI to e-wallets

The biggest takeaway is the ease of transaction. You can connect more than one bank to the UPI app; and payments go directly from your bank account. 

Another reason is, in e-wallets, sender and receiver should have same app. I can't transfer money from my Paytm to a MobiKwik user. But in the case of UPI, two people who have any UPI can transfer money to each other irrespective of the app they use. So transfer from PhonePe user to a user of Bhim or Tez is possible if the sender knows the recipient's UPI ID.

My gut feeling is that UPI is way forward for now. Only that the apps need to have more features on them.

Most importantly, retail stores, pharmacies, utility services, and any other places where people need to make payment, have to publicize their UPI ID, so that payments can be made easily.

What is your UPI ID?

It's very easy to get one. It's like an email ID, which I need if I need to send you a mail.

Download PhonePe, or Bhim, or Google Tez.

Your phone number is verified. Then you need to link your bank account to the UPI app. 

Then, you get a UPI ID. If it's PhonePe, it's usually your phone number@ybl; it is if Bhim it's phone number@upi; if it's Google's Tez, it's your Gmail ID@ok(name of the bank which you have linked).

If someone has to pay you money, just provide them your UPI ID, just as you provide anyone your email ID if they have to send you an email.

Money transfer can't get easier than this. It's all transparent, logged and accounted for. No need to worry about getting small change when shopping.