Explore the interrelationship of UPI, payment links and payment gateways www.deekpay.com

In this article, we will explore UPI, payment links and payment gateways in detail and understand how they compare to each other.

What is UPI

UPInamelyUnified Payment Interface of IndiaIt's a kind of a subject that's subject toReserve Bank of India (RBI) regulated real-time instant payment system. It facilitates peer-to-peer transactions, eliminating the need for customers to enter their bank details each time they make a payment.

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UPI Interoperability

NPCI (National Payments Corporation of India) launched the UPI Interoperability Pilot with UPI numbers.

UPI IDis an 8-10 digit code that the user can create and use in any UPI application. If it is a 10-digit number, the use of a mobile phone number must be mandatory.

By 1 December 2021, all UPI applications (TPAP and PSP) must be UPI ID compliant.

What is a payment link

Payment Linksis an online payment method that uses the customer's unique URL and sends it to a secure payment page to continue the transaction. Users can complete the payment through their desired UPI application or any of the available NEFT/IMPS/RTGS options to the displayed virtual account.

What is a payment gateway

Payment GatewayIt is a service provider that securely transfers funds between customers and merchants/entities using any payment method. Payment gateway acts like an intermediary between the two entities and provides a secure environment to prevent disclosure of sensitive customer information such as card details or any type of fraud.

Some of the prominent payment gateways in India include Razorpay and Stripe.

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Is UPI a payment gateway?

The Unified Payment Interface of India is a simple network for inter-bank transfers. Users can easily send or receive funds to or from anyone instantly without having to follow the IMPS The requirement to enter bank details. Payment gateways, on the other hand, are a subset of Payment Service Providers (PSPs) and are more complex tools with multiple underlying processes and steps to facilitate the transfer of funds between customers and merchants/businesses. While the ultimate goal of both is to facilitate payment transfers, UPI is the simpler and hassle-free option of the two.

UPI, Payment Links and Payment Gateways

Launched in April 2016, UPI has been a huge success and is the world's fifth largest payment network in terms of transaction volume after Visa, WeChat Pay, Alipay and Mastercard.

In 2019, Google wrote a letter to the Federal Reserve about the execution and huge success of the UPI built by India's NPCI for digital payments with scalable architecture. After its product Google Pay (formerly known as Google Tez) tripled in a year and attracted an impressive 67 million users, the tech giant heavily touted how it could replicate the same model in the US.

UPI India is getting attention not only in the US but globally. NPCI is working to land UPI in the UAE and Singapore, and soon the rest of South Asia.

So why the unanimous acceptance of UPI? Making it one of the most popular payment methods in the country (and probably in the world in the near future)?

More secure, with less risk of fraud and leakage of sensitive information. Ability to access multiple bank accounts simultaneously using a single point of access. Multiple apps available to process UPI based payments. (Google Pay, PhonePe, BharatPe) Ability to request payments Send money instantly and in real time

While these are just a few of the many advantages for consumers who choose UPI, what about businesses?

transaction cost

Payment gateways make payments easy. However, a transaction fee of about 2.0% per payment is a certain loss for both the merchant and the customer. If the subject matter involved is a small or medium sized business that enters and exits a large number of transactions on a daily basis, then this problem can snowball further. The cost of the payment gateway will definitely affect the company's commission structure.

On the other hand, businesses can significantly reduce transaction costs by adopting UPI or payment links for simple bank transfers. The lower cost of UPI can be attributed to the government-mandated zero merchant discount rate (MDR). The MDR is the cost merchants pay to banks and payment service providers (PSPs) to enable UPI infrastructure.

Fund settlement time

When a customer makes a payment through a payment gateway, it can take 1-3 days (or more) for the funds to be transferred to the company's account. Unlike businesses with their own UPI/banking infrastructure, the transfer of funds to a business is almost instantaneous.

Open Infrastructure

UPI is "open" - meaning tech companies can build apps to help users directly manage transfers to and from their bank accounts.

Floating or interest

When a business uses a payment gateway to make a transaction, the funds are held in the gateway's escrow account for a few days before being settled to the merchant. During this time, the PG can earn float or interest on the balance of the funds before they are transferred to the business account. The longer the funds remain in the account, the more interest the gateway earns.

Which industries can benefit from UPI and payment links

TLDR, we can say that it can utilise UPI or Payment Link to improve its financial and payment workflow in any industry that can move to cashless or cardless payment modes.

B2B Platform

UPI has had a positive impact on B2B, C2C, and B2C industries across all sectors. However, B2Bs, which tend to conduct high-volume, high-value transactions, will especially benefit greatly from UPI and payment links. With low-cost remittances, B2B businesses can save significant amounts of money and use the commission savings for more effective growth purposes. However, with a limit of Rs 10 lakh per UPI transaction (at the time of writing), businesses can use bank transfers for higher transactions.

B2B payments can be made smoothly and instantly by embedding QR codes or payment links in invoices. The payee entity can scan the payment QR code, access the link and complete the transaction.

Logistics and Trade

Logistics and trade is one of the behemoths of the large transaction volume industry, requiring payment tracking, expense monitoring and easy reconciliation. Due to the sheer volume of transactions, neither processing fees nor cooling-off periods for intermediary accounts are of any benefit to operators. What's the next best solution? UPI and payment linking, of course! A great example of this is our delivery heroes who use UPI QR codes or payment links to collect cash on delivery orders.

POS payments

Here, a user-owned POS simplifies the process of accepting payments at a location-specific point of sale. Merchants are charged an MDR or Merchant Discount Rate every time a customer swipes a card. The MDR is a processing fee that covers credit/debit card transactions and fraud protection. The fee varies between credit and debit cards, but can range from 1% to 3%. As a result, more and more merchants and shop owners are encouraging customers to use UPI-based QR codes or send them payment requests or links directly to avoid this fee. Fintech apps such as PhonePe, GooglePay and BharatPe are helping merchants achieve this.

Atpay - we are a professional provider of payment solutions and have been deeply involved for many years inIndia PaymentsWe have successfully provided payment functions for countless customers at home and abroad. We are fully confident in payment integration and high-risk payment processing, and welcome inquiries and exchanges.