Analysis of Usage of UPI Payments in Banking Sector

Abstract

The genesis of India’s unified payment solution prior to 2016; India used a number of different systems to transfer money between banks. The traditional forms included RTGS, IMPS and NEFT. With the plethora of systems, rules and growing paper burden, there was a need for a unified system that could automate and standardise India’s payment platforms. In 2016, NPCI set out with a mandate to change the face of India’s payment systems. It developed the Unified Payments Interface (UPI) as an architecture framework with a set of standard Application Programming Interface (API) specifications to facilitate online payments. The aim was to simplify and provide a single interface across all NPCI systems, thereby creating interoperability and a superior customer experience. The pilot program, with 21 member banks, was launched on 11th April, 2016, by Dr. Raghuram G. Rajan, Governor, RBI, in Mumbai. From 25th August, 2016, a growing number of banks started to upload their UPI enabled apps to the Google Play store. The Indian Banking system is considered as a strong backbone of India’s economy through which millions of financial transactions get exchanged every single minute. To increase this number in the year 2016 India has taken initiatives to start the “Digital India” campaign by National Payment Corporation of India (NPCI) through which online digital payments got huge importance. In the year 2021, India became the global leader in real time digital payments. This study will be helpful to understand the changing scenario of the banking system in India and also cover the satisfaction of customers with their banking services. In India unified Payments Interface has become the game changer in the history of the banking system. It helps to smooth functioning of the payment system without any complications. This study will be useful to know the impact of UPI on banking. The objective of the study is to study awareness, preferences, level of satisfaction of customers while transferring funds. The Unified Payment Interface (UPI) is one of the great inventions of E-payments introduced by National Payment Corporation of India (NPCI). UPI is an advanced and significant payment system in terms of cost, ease of use for consumers, settlement times and security. It has facilitated a large number of populations to bring within the purview of the digital economy. It is a type of payment system through which any customer holding a bank account can send and receive money through a UPI-based app. The customer can easily exchange money by using UPI payment apps.

Introduction

Unified Payments Interface (UPI), launched by the National Payments Corporation of India in 2016, is a real-time digital payment system enabling inter-bank transfers. It consolidates multiple bank accounts into one mobile app, allowing seamless peer-to-peer and peer-to-merchant transactions. UPI supports payments via various identifiers like UPI ID, mobile number, account number, and IFSC. It ensures security through 1-click 2-factor authentication and is also accessible via USSD for feature phone users.

Study Objectives

1. Understand the UPI framework.

2. Measure user satisfaction with UPI apps.

3. Identify challenges faced by users.

Scope of Work

• Analyze UPI’s working algorithm.

• Examine actual money receipts and payments.

• Evaluate UPI’s usefulness, including advantages and disadvantages.

Review of Literature

• Digital India Citizen Survey (2023): Aimed to gather citizen feedback on UPI experience.

• Dr. Prakasha M. N (2023): Found high awareness and satisfaction with UPI among university students.

• Gupta & Chand (2021): Revealed that more males use UPI; users generally satisfied.

• Balsubhramanium & Amanullah (2019): Highlighted UPI’s role in paperless transactions, with apps like Google Pay and PhonePe more popular than BHIM.

Research Methodology

Data Sources:

• Primary: Collected via interviews (IDBI bank customers and merchants) and observations at markets and shops.

• Secondary: Sourced from books, journals, government reports, online databases, and previous studies.

Conclusion

The UPI payment is very useful for the payment purpose the individuals do not have to pay any extra amount for the payment. It is very helpful for carting cashless economy system. The people of different age group, different income level uses UPI applications for the payment purpose. From this study it is observed that more than 95% of the respondent uses digital payment application for payment. People find it more useful than traditional method of banking. It also helpful for doing all transaction through UPI because it help to trace each and every transaction. The usages of payment app reduced the burden of bankers’ form handling huge transaction on bank counter.

References

[1] https://www.statista.com/topics/11320/UPI-in-india/ [2] https://www.npci.org.in/what-we-do/UPI/product-statistics [3] https://www.rbi.org.in/commonman/English/scripts/UPI.aspx [4] https://www.UPIchalega.com/ https://shodhganga.inflibnet.ac.in/ [5] https://msnim.edu.in/documents/106/REVISED_PaperMaria36-55.pdf [6] https://en.wikipedia.org/wiki/Unified_Payments_Interface [7] https://www.simplilearn.com/what-is-data-collection-article

Copyright

Copyright © 2025 Megha Joshi. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.