In this article, we will get a better understanding of what a virtual Payment address (VPA) is and what role it plays in the UPI mechanism
Virtual Payment Address: Overview
Digital money transactions have been around for a while now in the form of online money transfers methods such as NEFT. But these methods were cumbersome with 24-48 hour waiting periods to add a payee, multiple passwords at each stage and inaccessible to everyone. Besides, the banks had to develop their own applications or portals for their customers. So it was much more tedious for people with accounts in more than one bank as they had to access different portals to perform a transaction online through different banks. Know more about Virtual Payment Address (VPA) method Online!
All of this changed with the arrival of the Unified Payments Interface, or UPI, developed by the National Payments Corporation of India which is a division of the Reserve Bank of India. This technology was the first of its kind, not just in India, but in the world. India led the global economy in simplifying digital payments. Since its introduction in 2016, several economies across the world have already or are in the process of replicating UPI due to its phenomenal success in the Indian market.
When the amount of thought put into a product is less, the end product is bound to be a cumbersome facility for the consumer because no attention has been paid to what the consumer wants. This was the issue with online banking transactions like NEFT which were facilities that were made available to consumers with means and because the process was so cumbersome, the facility was never used unless it was absolutely necessary or the amount of the transaction was too large. It was never the preferred mode of transaction. Small transactions were always made in cash due to the convenience.
But UPI made digital transfer of money for small transactions on the record, transparent and at least as easy as making a cash transaction if not easier. So It goes without saying that a lot of thought and a lot of features have been preempted and developed into the UPI mechanism. One of the most important features of the mechanism is the VPA or the Virtual Payment Address. But in order to understand VPA better, we first need a clear understanding on how UPI works.
What is UPI Money Transfer?
The Unified Payment Interface, better known as UPI, is the latest technology put to use to help make money transfer faster, simpler, and more accessible. The system assists with transferring money between accounts and services, helping facilitate bill payments, individual money transfers and online shopping.
The system is simple to use, as it only requires the downloading and installing of an app. The UPI app requires a one-time registration and linking of your bank account with the application. Once this is done, you never have to log onto the bank portal to make online money transfers. You can also link multiple bank accounts to a single ID on the application, there is no waiting period for adding a payee and is accessible with a basic mobile phone which makes its accessibility wider. UPI money transfers all eliminate the need to pay extra transaction charges, making it a more elegant as an economical solution.
In order to make a UPI transaction all you have to do is to enter the mobile number of the individual in your app and enter the amount of money to be transferred. You have to enter a single six-digit PIN number to authorize the transaction and the receiver receives the payment instantly. So what role does the Verified Payment Address play in this mechanism?
What is VPA for UPI Apps?
The Virtual Payment Address, better known as VPA within the UPI mechanism serves as a unique code or identifier that helps the system differentiate and identify different users and accounts. While it serves as an identifier, it is independent of the bank account number that you have and is an entirely different unique keyword used to authorise transactions. This is what makes it possible to link multiple bank accounts to this unique ID known as VPA. While UPI money transfer may be done using IFSC codes, bank account details and other information, the VPA address is the easiest to remember. Therefore, rather than repeatedly entering the bank account number and additional information every time, users can replace that with a simple and unique identifier.
UPI Transaction With the Help of an Example
UPI or Unified Payments Interface is a smartphone application that allows users to transfer money between bank accounts.
Here’s an example of how a UPI transaction works:
- John opens his UPI app and enters the Virtual Payment Address (VPA) of the payee.
- John enters the amount he wants to transfer and confirms the transaction.
- John’s bank sends a payment request to the payee’s bank through the UPI system.
- The payee AKA Doe receives a notification on her UPI app and confirms the transaction.
- Doe’s bank sends a confirmation to the payer’s bank through the UPI system.
- Thereafter John and Doe receive a confirmation of the successful transaction on their respective UPI apps.
How is the VPA in UPI is Unique?
The Virtual Payment Address (VPA) in UPI is a unique identifier that is linked to a user’s bank account. It is a combination of the user’s name and a unique identifier provided by the Payment Service Provider (PSP).
For example, if a user’s name is John and they use PhonePe as their PSP, their VPA could be john@phonepe. VPA eliminates the need to enter bank details or other sensitive information each time a customer initiates a transaction, making it a safe way to bank.
Compare UPI With Other Modes of Online Payment
UPI is a game-changer technology for digital payments, allowing users to make instant payments, check account balances, and manage multiple bank accounts in a single app.
Compared to other modes of online payment, UPI has several advantages:
Instant Payments: UPI enables instant payments, removing the constraints of time for both individuals and businesses.
Lower Fees: UPI transactions typically have lower fees compared to traditional payment methods or card-based payments, making it a cost-effective choice for receiving payments.
Unified Platform: The primary purpose of UPI is to provide a unified and simplified platform for facilitating digital transactions.
Uses & Benefits of VPA
The Virtual Payment Address (VPA) in UPI has several uses and benefits:
- Unique Identifier: The VPA is a unique identifier that is linked to a user’s bank account, eliminating the need to enter bank details or other sensitive information each time a customer initiates a transaction.
- Easy to Remember: The VPA is easy to remember and share, making it convenient for users to make and receive payments.
- Secure: The VPA is a safe way to bank as it eliminates the need to share sensitive information like bank account numbers and IFSC codes
How Do VPA Transactions Take Place?
VPA transactions take place through the UPI system. When a payer initiates a transaction, their bank sends a payment request to the payee’s bank through the UPI system.
The payee then receives a notification on their UPI app and confirms the transaction. The payee’s bank thereafter sends a confirmation to the payer’s bank through the UPI system, and both parties receive a confirmation of the successful transaction on their respective UPI apps.
VPA Suffixes of Some Common Banks
Different banks have different suffixes for their Virtual Payment Addresses (VPAs). Here are some examples:
- ICICI Bank: @icici
- HDFC Bank: @hdfcbank
- State Bank of India: @sbi
- Axis Bank: @axisbank
- Bank of Baroda: @barodampay
Why Use Virtual Payment Address (VPA)?
- UPI money transfer has made life easier for everyone by allowing us to make transactions with ease and efficiency.
- UPI money transfer has eliminated the need for extra transactional charges.
- The system allows you to make and receive virtual payments from any phone that has a UPI app installed.
- Making use of one unique VPA address makes it easy to keep track of all your payments done through various portals and sources.
- You no longer have to remember lengthy bank account numbers or IFSC codes. As the VPA address usually contains a personal detail, it is a lot easier to remember than a random string of numbers.
- You have the option to track the status of your previous accounts and transactions using your VPA number.
- Due to the rising popularity of online or digital India. Most businesses and enterprises now accept UPI money transfer, making it an instrumental technology.
How To Get A Virtual Payment Address (VPA)?
- Download and install a UPI App.
- Link the UPI App to your registered bank account using your registered mobile number.
- Complete the mobile verification process, and set an authentication technique to enter the UPI app.
- Once you are done with the verification, create a VPA for yourself using the Create VPA option.
- You may choose your email ID, or make one for your own depending on the VPA’s availability.
- Once the system verifies that an ID is unique, it is approved instantly and becomes your virtual payment address.
Sending And Receiving Money Via Virtual Payment Address
- Log in to your UPI App using your PIN.
- Go to the Fund Transfer option, and from the tab, choose the Payment Using UPI option.
- Now enter the VPA address of the sender, and click on Verify.
- After verification, enter the amount you want transferring and click on Next.
- Lastly, input your UPI Pin to validate the transfer and send the money.
- To Receive Money
- Log in to your UPI App using your PIN.
- Choose the UPI option, and then click on the Collect Via UPI option.
- Input the VPA address of the person you want to request money from and click on Verify.
- Next, enter the money you require and add appropriate remarks.
- Choose the VPA to which you want the money to be transferred.
- Submit the request and wait for the receiver to complete the fund transfer.
UPI AutoPay
UPI AutoPay is a feature that allows users to set up recurring payments for bills and subscriptions. Users can link their UPI ID to the service provider’s UPI ID and authorize the payment. Thereafter the payment will be automatically deducted from the user’s bank account on the due date.
Google Pay UPI Transaction Limit
As of June 2023, users of Gpay can transfer up to INR 1 lakh per day per bank account in a single UPI transaction
PhonePe UPI Transaction Limit
As of June 2023, users of PhonePe can transfer up to INR 1 lakh per day per bank account in a single UPI transaction.
FAQs:
1. Is it safe to share my VPA with others?
Yes, it is generally safe to share your VPA with trusted individuals. However, exercise caution and avoid sharing it with unknown or untrusted sources.
2. Can I have multiple VPAs linked to a single bank account?
Some UPI apps may allow you to link multiple VPAs to a single bank account. Check with your UPI app for more details.
3. Can I link my VPA to multiple bank accounts?
No, a single VPA is typically linked to one specific bank account.
4. Is there a transaction limit associated with VPA payments?
Yes, there is usually a transaction limit for VPA payments, which can vary depending on your bank and UPI app.
5. Can I use my VPA for international transactions?
No, VPAs are primarily designed for domestic transactions within India and may not be used for international transfers.
6. Are there any backup options if I forget my VPA?
If you forget your Virtual Payment Address (VPA), there are no direct backup options available. However, you can reset your UPI PIN by logging into the UPI application.
7. How do I report unauthorized transactions made using my VPA?
If you notice any unauthorized transactions made through your VPA, contact your bank or the customer support of your UPI app immediately to report and resolve the issue.
8. Can I deactivate or delete my VPA?
You can typically deactivate or delete your VPA through the settings or customer support of your UPI app. Note that the process may vary between apps.
Conclusion
Unlike two or three decades ago where new innovations came about only once in a few years, now things change everyday. Even within the UPI ecosystem, new features are being added everyday not only making it easier for the consumer to make payments more securely and easily but also to facilitate larger issues like transparency in economic transactions.
We can expect many more technological innovations and automations in the Indian administrative system because the more automation in administrative roles the easier it gets to manage a gargantuan population like ours.
If you have any other queries or require any sort of legal assistance get in touch with us at Vakilsearch and we will ensure that you get the right kind of guidance from the right team of experts.
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