Ravi Vishwakarma Blackbook

A PROJECT REPORT
ON
“A FINANCIAL STUDY OF TRANSACTIONS OCCURING VIA UPI ON A

DAILY
BASIS”
SUBMITTED IN THE PARTIAL COMPLETION OF DEGREE

OF
BACHELOR OF COMMERCE (ACCOUNTING & FINANCE)
SUBMITTED BY
RAVI KUMAR DURGAPRASAD VISHWAKARMA
UNDER GUIDANCE OF
PROF. RAHUL
JAISWAL
ASM'S INSTITUTE OF MANAGEMENT & COMPUTER STUDIES (IMCOST),

DEGREE COLLEGE
DECLARATION BY LEARNER
I the undersigned RAVI KUMAR DURGAPRASAD

VISHWAKARMA here by, declare that the work embodied in this project work
title “ A FINANCIAL STUDY OF TRANSACTION OCCURING VIA UPI
ON DAILY BASIS ” forms my owncontribution to the research work carried out
under the guidance of PROF RAHUL JAISWAL is a result of my own research
work & has not been previously submitted to any other University for any other
Degree / Diploma to this or any other University.
Wherever reference has been made to previous works of other, it has been
clearly indicated as such and included in the bibliography. I, here by further declare
that all information of this document has been obtained and presented in
accordance with academic rules and ethical conduct.
RAVI KUMAR DURGAPRASAD VISHWAKARMA
Name & Signature of the Learner
Certified by
Name & Signature of the Guiding Teacher

ACKNOWLEDGEMENT
To list who all have helped me in difficult because they are so numerous & depth
is so enormous.
I would like to acknowledge the following as being idealistic channels & fresh
dimensionsin the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.
I would like to thank the Principal of our college for providing the necessary
support required for completion of the project.
I take this opportunity to thank our Course coordinator Prof. Tejasvi Bhosale, for
her moral support & guidance.
I would also like to express my sincere gratitude towards my project guide Prof.
Rahul Jaiswal whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference
books and magazines related to my project.
Lastly, I would like to thank each & every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.
TOPIC – A FINANCIAL STUDY OF TRANSACTIONS OCCURING VIA UPI
ON A DAILY BASIS
INDEX
Chapter TABLE OF CONTENTS PAGE

No. NO.
1 INTRODUCTION 1-42
1.1 Introduction to UPI

1.2 History
1.3 Organizational team
1.4 Features of UPI
1.5 Working mechanism of UPI
1.6 Fundamentals of UPI
1.7 Improvements in UPI over existing payment systems
1.8 Types of UPI Payment Apps
1.9 Differentiation between UPI & Other Digital Modes
1.10 Architecture of UPI
1.11 Impact of UPI on payment industry
1.12 The way forward – UPI 2.0
1.13 Worldwide Acceptance
1.14 SWOT Analysis
2 RESEARCH METHODOLOGY 43-45
2.1 Objective of study

2.2 Scope of study
2.3 Need for study
2.4 Sample size
2.5 Collection of data
3 REVIEW OF LITERATURE 46-47
4 DATA ANALYSIS, INTERPRETATION AND PRESENTATION 48-67

5 CONCLUSION AND SUGGESTIONS 68-72
5.1 Findings
5.2 Conclusion
5.3 Suggestions
5.4 Limitations
6 BIBLIOGRAPHY 73-74
7 QUESTIONNAIRE 75-78
0
CHAPTER 1. INTRODUCTION TO UPI
1.1 INTRODUCTION
UPI, short for Unified Payments Interface, is a real-time payment system designed and launched by the
National Payments Corporation of India. The pilot launch was on 11th April 2016 by Dr. Raghuram G
Rajan, Governor, RBI at Mumbai. Banks have started to upload their UPI enabled Apps on Google Play
store from 25th August, 2016 onwards. It is a mobile platform that enables instant fund transfers between
bank accounts and is regulated by the Reserve Bank of India. In the last decade, India has been gradually
advancing in the field of electronic payments. UPI is one of the methods developed to digitize the banking
system. Despite being a large economy, many individuals in India remain unbanked and unaware of secure
and simple banking services. This is due to low literacy rates and other factors that hinder their use of these
services. Thus, it is important to overcome these challenges to make the payment process more accessible.
The Government of India established the National Payments Corporation of India (NPCI) in 2009 with
the goal of making electronic banking more accessible, convenient, and secure. NPCI is responsible for
overseeing all electronic payments in India and operates with the guidance and support of the Reserve
Bank of India (RBI) and the Indian Bank Association (IBA). Since its establishment, NPCI has taken
various measures to streamline the payment system by offering a single interface across all systems.
The key factors driving the development of electronic banking include:
a. Simplified Fund Transfer:
The payment process should be as simple as making phone calls or using a basic mobile phone. To send
money, you should only need to know the recipient’s phone number, Aadhaar card number, or virtual
address, without having to enter multiple details such as the account number or IFSC code.
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b. Universal Adoption:
The payment system should allow for easy sending and receiving of money regardless of the type of
mobile device used. The system should be universal and allow interoperability between different
identifiers such as Aadhaar card numbers, mobile numbers, or Virtual Payment Addresses (VPA).
c. Security:
This is of utmost importance. The system should provide end-to-end protection for the sender and receiver,
and the transmission of data from the smartphone to the server should be strongly encrypted. The
payment process should also not be complicated.
d. Cost-effectiveness:
With an estimated 650 million smartphone users today, expected to threefold in the next 5 years, the
system should take full advantage of this growing user base. Using mobile phones for authentication,
virtual payment addresses, and third-party portable authentication schemes such as the Aadhaar Card can
reduce costs for both the acquiring side and the issuing side. This allows banks and other payment players
to focus on their core businesses, and for half a billion phones to serve as the primary payment device in
conjunction with other authentication methods.
The Reserve Bank of India has taken steps to promote digital payments in India and established the
National Payment Corporation of India (NPCI) to create low-cost digital payment systems. NPCI
launched the Unified Payment Interface (UPI) in 2016, a mobile-based payment system that enables real-
time bank payments and leverages India’s high tele density to make mobile phones the primary payment
device. This paper studies the technology behind UPI, its value compared to existing digital payment
systems and how people use it on a day-to-day basis. UPI has seen rapid growth due to the expanding
ecosystem and increased user adoption. However, for UPI to reach its full potential, it is important to
develop merchant- centric UPI payment solutions. The paper explores the technical architecture,
transaction processes, and
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security systems of UPI, which can help to create innovative business solutions. India currently lacks
digital payment infrastructure for merchants, and merchant- centric UPI solutions can address this cost-
effectively. In conclusion, UPI is a game-changer in the Indian payment’s ecosystem, offering a seamless
and unified platform for inter-bank transactions. With its ease of use and secure transactions, UPI is
expected to become the preferred payment method for millions of people in India in the future.
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1.2 HISTORY
The RBI has been working to promote digital payments in India and to make the country “less cash”
dependent. The RBI’s vision is to ensure that payment and settlement systems in India are safe, efficient,
interoperable, authorized, accessible, inclusive, and compliant with international standards.
Demonetization in 2016-17 was a turning point in the payments landscape in India. The scarcity of paper
money led to an increase in the use of digital wallets, largely driven by private technology companies. In
response to this change, the RBI, and the Indian Banks Association (IBA) established NPCI to create a
new payment system, UPI. UPI was launched for public use in August 2016 and has since seen rapid
growth, becoming a game- changer in the Indian payments ecosystem by offering a seamless and unified
platform for inter-bank transactions.
Money Mobile Identifier (MMID) enabled a bank account holder to send or receive money from any bank
account via their mobile number, thereby enabling an end-to-end mobile-based payment system. This
paved the way for the launch of Unified Payment Interface (UPI), which allowed for seamless
transactions between any two bank accounts in India on a 24x7 basis, without the need for internet
banking or mobile banking credentials.
UPI leverages the technological advancements of Immediate Payment Service (IMPS), Money Mobile
Identifier (MMID) and the interoperable platform of National Finance Switch (NFS) to offer an integrated
payment system. The platform enables instant money transfer through a mobile device, allowing customers
to send or receive money, pay bills, and even set up recurring payments, without the need to remember
beneficiary details, account numbers, and other details.
UPI transactions are secured with two-factor authentication, and the platform uses secure encryption
techniques to protect sensitive data. The platform is also accessible in regional languages, thereby
enabling financial inclusiveness for millions of Indians who are not fluent in English.
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UPI has become the backbone of the digital payments ecosystem in India and has been
instrumental in driving the adoption of digital payments in the country. It has made digital
payments accessible and affordable for the masses, thus helping to build a less-cash society.
UPI is the latest addition to the digital payment landscape in India, and it is poised to transform the
way digital payments are made and received in the country. With its ease of use and low cost, UPI
has the potential to significantly increase the number of digital transactions in India and help drive
the country towards a cashless future.
UPI eliminates the need for users to know the bank details of the recipient, making it possible to
transfer money using only the recipient’s mobile number or UPI ID. This significantly reduces the
friction associated with making digital payments and is expected to drive widespread adoption of
the platform.
Additionally, UPI provides a common platform that connects payers and payees, and enables real-
time, secure, and instant transfer of funds. The platform operates 24x7 and can be accessed through
mobile phones, internet banking and other channels.
UPI’s success will depend on several factors, including the availability of reliable and secure
mobile and internet connectivity, the ease of use of the platform, and the extent to which
merchants and businesses embrace the platform and start accepting digital payments.
Nevertheless, the early signs are very promising, and UPI has the potential to be a catalyst for the
digital transformation of India’s economy.
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1.3 ORGANISATIONAL TEAM
Mr. Dilip Asbe

Managing Director (MD) & Chief Executive Officer (CEO)
Under his leadership, NPCI has established itself as a reliable and secure provider of digital
payment services in India, transforming the way people make and receive payments. With the
launch of UPI, NPCI has not only made it easier for people to transfer money in real-time but has
also enabled merchants and businesses to collect digital payments more easily and cost-
effectively, without the need for expensive POS machines.
Mr. Asbe’s vision and commitment to creating a more inclusive and efficient digital payment
system has helped drive the adoption of UPI, which now has over 1 billion registered users and
processes over 1 billion transactions per month. His efforts have played a crucial role in the
growth and development of the digital payment ecosystem in India, and his continued leadership is
expected to drive further innovation and growth in the future.
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Ms. Praveena Rai
Chief Operating Officer (COO)
Ms. Rai is a seasoned professional with a strong background in the payments and banking
industry. She has extensive experience in product management, business development, and
marketing, and has a track record of delivering results in these areas. Her work in driving the
growth and penetration of NPCI’s offerings has been instrumental in furthering the cause of
digitalization in India. With her wealth of experience and expertise, Ms. Rai is well-equipped to
lead NPCI’s efforts to create a simple, secure, and seamless consumer experience, and to advance
the country’s digital transformation.
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Mr. Viswanath Krishnamurthy
Chief Risk Officer (CRO)
With his extensive knowledge and experience in the banking industry, Mr. Krishnamurthy has
been a valuable asset to NPCI, ensuring the safety and security of the digital payment transactions
that take place in the ecosystem. His expertise in enterprise risk management and fraud risk
management has helped NPCI to maintain its high standards of security, making it a trusted
platform for digital payments. Mr. Krishnamurthy’s commitment to ensuring a safe and secure
digital payment environment has contributed greatly to the success of NPCI’s digital payment
initiatives.
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Mr. Rupesh Acharya
Chief of Finance
Rupesh’s extensive experience in finance, coupled with his knowledge of the industry, makes him
well-equipped to manage the financial goals and objectives of NPCI. His background in
manufacturing and IT, as well as his experience in the financial services sector, provides him with
a well-rounded understanding of various business operations and functions. His role in the
Executive Committee of IDFC Asset Management Company Ltd showcases his leadership skills
and ability to work effectively at a senior level. With his strong background in finance and
experience in decision-making and risk management, Rupesh is an invaluable asset to NPCI.
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1.4 FEATURES OF UPI SYSTEM
 Users can link their overdraft accounts to UPI.
 Facilitates instant transactions with all associated OD account benefits.
 Expands UPI's accessibility as an additional digital channel for OD accounts.
 Allows pre-authorization of transactions with a one-time block functionality.
 Ideal for scenarios where money transfer commitment is made in advance.
 Seamless execution for both merchants and individual users.
 Enables customers to review invoices from merchants before making payments.
 Enhances security by verifying the credentials and source of the invoice.
 Streamlines the payment process post-verification.
 Heightens security by verifying the authenticity of merchants via QR codes.
 Provides user notifications to ensure the merchant is a verified UPI merchant.
 Accelerates transactions as an app passcode is unnecessary for signed intent.
As UPI unfolds, it brings not just new features but a promise of heightened efficiency,
security, and accessibility in digital transactions. The collaborative efforts of NPCI, banks,
and key industry players aim to further integrate digital payments into the fabric of India's
financial landscape.
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1.4 WORKING MECHANISM OF UPI
UPI can be used for sending and receiving money. Anyone who has a smart phone with an internet
connection and a Bank account can easily avail the services of UPI.
 First Step
To get started, firstly, the user has to download the UPI application from Google play store or any other 3rd
party source. It is not mandatory that you should download the application with respect to your bank, you
can also download any other UPI application and you can use it.
 Second Step
Then by using your mobile number, bank account linked to your mobile number will be searched. Then by
entering the last 6 digits of your Debit Card, your bank will be registered with the UPI application.
 Third Step
A VPA (virtual payment address) is to be created by user in the next step. The VPA is a unique address
like an email id and every user will get a unique ID which would be attached to their bank account and
then a mPIN (Mobile Baking Personal Identification Number) is set up for the Bank account.
For example, if you are using PhonePe application, then you will get a VPA as user1demo@ybl OR
abcd@ybl
User can send and receive payment worth minimum Rs 1 up to Rs 1,00,000 per day. As of now, NPCI is
not charging for the transactions. User will get his payment notification in the form of IMPS in the Bank
account statement.
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1.5 FUNDAMENTALS OF UPI
UPI also provides features such as ability to link multiple bank accounts, merge accounts, enable transfer
of money across accounts, check account balance, and set mandates for recurring transactions. In addition,
UPI also provides merchants with an integrated platform for online and offline transactions.
UPI has been successful in increasing the digital payments ecosystem in India by providing a convenient
and secure payment experience to the consumers. With UPI, consumers can initiate transactions 24x7,
making digital payments accessible and convenient at any time. The platform also provides consumers
with a secure and safe platform for digital transactions, with transaction details and information being
encrypted and securely stored.
UPI has brought about a major shift in the payment landscape in India and has made digital payments
accessible to millions of consumers who previously had limited access to digital payment systems. The
platform has been instrumental in promoting financial inclusion and providing an easy and affordable
solution for digital payments to the masses.
UPI uses IMPS as the switching mechanism to enable instant payments and settlement between different
financial institutions. With UPI everyone with a bank account in India can create their Virtual Payment
Address (VPA or UPI ID) and start transacting using a mobile phone. This Virtual Payment Address for
E.g., abcd@xyzbank becomes a person’s unique payment identity and abstracts the need to share bank
details while transacting.
UPI considerably simplifies digital payments, instead of issuing cards to a large population which is costly
and time-consuming UPI enables mobile phone a primary device for authorizing and making payments.
Also, a mobile phone combined with a unique payment ID makes it a low-cost payment acceptance
device thus making digital payments universal, easy, and low cost.
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1.6 IMPROVEMENTS IN UPI OVER EXISTING PAYMENT SYSTEMS
1) Pull-based mobile transactions:
Current digital payment methods, such as cards and online payments, are push-based, meaning that
customers start the transaction. The client cannot initiate a payment request (pull) from the business and
then approve and pay it. Real-time push and pull transactions utilizing a mobile phone are made possible
via UPI.
2) User interfaces with interoperability:
UPI enables cross-interface payments, meaning that a transaction can be authorized on one interface while
a payment is requested on another. For instance, a website may allow a merchant to request payment from
a customer, who may subsequently authenticate and pay using a mobile phone.
3) Abstraction of Bank Information:
To complete a transaction, you do not need to divulge any private financial information like your account
number or others. Users have the option of creating a special virtual payment address that acts as their own
identification while sending or receiving payments. Since the user is not compelled to provide any personal
data on third party interfaces, this results in secure payments.
4) One-Click Two-Factor Authentication for Safety:
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In order to complete a transaction with UPI, the customer only needs to enter their MPIN on their mobile
device. This differs from the current payment systems where transactions require entering card
information, usernames, passwords, OTPs, etc. on devices or websites owned or operated by third parties.
5) Mobile first access:
UPI is designed to be used on smartphones used by the Indian population, enabling affordable and
universal digital payments. With UPI, there is no need to create consumer-side hardware infrastructure
(cards, etc.) to enable digital payments. Almost every adult in India has a bank account and a mobile
phone. UPI leverages this ubiquitous relationship to enable universal digital payments in India.
Other mobile payment systems, such as e-wallets, operate in their own silos, which means that the payer
and the payee must be on the same platform during the transaction. In UPI, only the recipient’s payment
address is required, and the amount is transferred to the bank account. Also, in order to trade with
electronic wallets, users need to preload money into wallets, which means their money stays in the wallet
account until it is returned to the back accounts. Although there is no need to pre-load the wallet in UPI,
the money is directly debited from the payer's bank account and credited to the recipient's bank account.
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1.7 TYPES OF UPI PAYMENT APPS
1. PhonePe
Sameer Nigam founded PhonePe in 2015 and serves as its Chief Executive Officer. PhonePe is an Indian
digital payments and financial technology company headquartered in Bangalore, Karnataka, India.
PhonePe was founded in December 2015. A PhonePe app based on Unified Payments Interface (UPI) was
launched in August 2016. 87% of PhonePe is owned by Flipkart, 13% by Walmart and the remaining 3%
by other stakeholders. PhonePe app is available in various Indian languages. PhonePe allows users to send
and receive money, top up mobile phones, DTH and data cards, pay utility bills, pay in stores, save tax
money, invest cash, buy insurance, mutual funds, gold, and silver. PhonePe also allows users to book
rides for Ola, pay for Redbus tickets, book flights and hotels on Goibibo via the Switch platform.
PhonePe won the NPCI UPI Digital Innovation Award in 2018 and in 2019 it won the Best Mobile
Payment Product or Service at the 9th India Digital Awards 2019 hosted by IAMAI.
By 2022, consumers have made over a whopping 7 billion transactions through PhonePe. It is considered
to be one of the most used UPI apps till date and it holds majority market share.
Another feature is that the application can also be used to withdraw funds from PhonePe merchants.
PhonePe has been successful enough to acquire a 50% stake in the market with 350 million registered
users and a total of 20 million merchant users.
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2. Google Pay
Tez Pay, popularly known as Google Pay or GPay, was developed by Google Inc., one of the largest
companies developed in 2017. 42 countries have already adopted Google Pay, and its global reach is
growing every day. There are 9 languages available in this application. Google Pay partners with ICICI
Bank to provide loans and earn interest charged. "Toggle" is a Google exclusive feature that also protects
your transaction history from Google itself. Google Pay leads after PhonePe with 36% market share. 220
million people are registered, and 10 million merchants use Google Pay. It is scheduled to shut down in
the United states in 2024, with functionality merged into the Google Pay website and Google.
3. Paytm
Paytm (acronym for "Pay through Mobile") is an Indian multinational financial technology company
specializing in digital payments and financial services. The Company provides mobile payment services to
consumers and enables merchants to receive payments through QR code, POS and online payment
gateway products. Paytm partners with financial institutions to provide consumers and merchants with
financial services such as microcredit and buy now pay later. In addition to bill payments and money
1
transfers, the
1
company also offers ticketing services, retail products, and online games. Paytm has emerged as the third
largest player in India's digital payments ecosystem, accounting for 14.94% of UPI's total transaction
value. Paytm has 350 million registered users, which is the most among others, and about 60 million bank
customers. They recently launched Paytm Post-paid, which offers a service similar to credit cards. Paytm
makes money from the loans and various other services it provides.
On January 31 2024, the Reserve Bank of India (RBI) barred Paytm Payments Bank Limited (PPBL)
from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, FASTags and
NCMC card after February 29, 2024, due to ongoing non-compliance and material supervisory concerns.
Furthermore After 2024 March 15 , transfers into Paytm Payments Bank accounts through UPI or
IMPS will be discontinued.
4. BHIM UPI
BHIM's Bharat interface is being developed by the regulator itself, BHIM is primarily focused on person-
to-person transactions where NPCI which fully focuses on UPI transactions, Since its launch in December
2016, it has clocked over 25 million transactions by 2022. The application is available in 20 different
languages, making it accessible to most Indians, but it loses market share to other payment apps. As they
have lost their influence in the market, they should consider using other marketing strategies to grow.
According to NPCI, early use cases include FASTag top-ups, insurance claims payments, and offline EMI
collection.
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5. Amazon Pay UPI
Amazon Pay was launched by Amazon in 2007 with the sole purpose of offering payments to merchants
through the Amazon app itself. On 14 February 2019, Amazon launched Amazon Pay Unified Payments
Interface (UPI) for Android users in partnership with Axis Bank. This service issue UPI IDs to its Indian
customers to allow for secure payments. Now Amazon Pay UPI has over 80 million users are registered
with Amazon Pay from India, Amazon Pay, the payments business of e-commerce giant Amazon, has
been growing at 40-50 per cent year-on-year.
Amazon Pay Wallet UPI ID (mobile#@amazonpay) is linked to your Amazon Pay Wallet, which is
different from the Amazon Pay UPI ID (mobile#@apl) which is linked to your bank account
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1.8 DIFFERENTIATION BETWEEN UPI & OTHER DIGITAL MODES
1. UPI vs IMPS
Basis UPI IMPS

Meaning Unified Payment Interface is a payment The Interbank Mobile Payment
system that allows you to transfer Service (IMPS) is an instant, real-
money between any two bank accounts time electronic money transfer
using your smartphone. system between banks.
Platform This is possible for both banking This is only possible through the
applications and payment banking banking application.
applications.
Charges Banks do not charge transaction fees A small fee will be charged
for UPI transactions. depending on the amount sent.
Requirements Only a Virtual Payment Address Name of account holder, Bank

(VPA) is required. Name, Account Number, Bank
branch & IFSC code is required.
Security It is safe as only a VPA is shared (No It isn’t safe as sensitive data
bank details are shared). (Name of account holder, Account
Number) is shared.
Collection Request You can request creditors to collect Collection request can’t be sent
debts from the app and set payment through the IMPS platform.
deadlines.
Transaction Limit UPI has a limit on transactions of The transaction limit for IMPS
maximum Rs1,00,000 per day differs from bank to bank. Most of
the banks have set it to Rs2,00,000
per day.
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2. UPI vs Digital Wallets
Basis UPI Digital Wallet

Meaning Unified Payment Interface is a payment A mobile wallet is a kind of
system that allows you to transfer payment service that allows
money between any two bank accounts businesses and individuals to pay
using your smartphone. and receive and send money via
your mobile device
Source The money stays in the bank account The money must be transferred
with its profit like interest. from your bank account to your
wallet and no interest is provided.
Interoperability Money can be sent or received to any Money may be sent to or acquired
UPI ID (VPA). via equal wallets only.
Intermediary UPI includes direct bank-to-bank A wallet acts as an intermediary

transfers. between two bank accounts when
funds are transferred from bank
account to wallet.
Controlling/Managing This is an NPCI initiative and is Privately owned but regulated by

body managed by RBI. RBI.
Collection Request You can request creditors to collect Collection requests cannot be sent
debts from the app and set payment via mobile wallets.
deadlines.
Transaction Limit UPI has a limit on transactions of Wallets have a storage limit of
maximum Rs1,00,000 per day ₹10,000.
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1.9 ARCHITECTURE OF UPI
UPI works on a common layer or interface developed and hosted by NPCI. This common layer
coordinates transactions and ensures payments between bank accounts using IMPS and the Aadhaar
Enabled Payment System (AEPS). Banks, financial institutions, and other companies that offer UPI
services will connect to NPCI's unified interface via standard APIs, enabling transactions from a virtual
payment address without the need to share account details or credentials. With UPI, payment
authentication and authorization are always done on our personal phone. This layer provides a unified
interface so we can make interoperable any-to-any payments using a standard set of APIs. Today, more
than 40% of all payments done in India are digital, with UPI having a lion's share, used by over 30 crore
individuals and over 5 crore merchants.
All APIs are exposed as stateless services with XML inputs and outputs over HTTPS. Any entity that
uses UPI services must guarantee idempotent behaviour for all APIs. These APIs are asynchronous
in nature. This means that after the request is sent, the response is returned separately via the
appropriate response API. This ensures that responses to API calls are returned to the caller
immediately after the request is queued.
All requests and responses must be associated using the transaction ID set by the originator. The caller is
expected to call the API with a unique transaction ID, and the response will be sent via the caller-
provided response API. This allows to use the same API for both immediate and deferred payments.
This also allows to scale the API without waiting in blocking mode. There are a number of standard
APIs available to major participants in the various UPI ecosystems. These APIs can be used to perform a
variety of financial and non-financial transactions. Besides the transaction API, there are a number of
meta-APIs that allow the whole system to work in an automated way. These meta-APIs allow PSPs to
validate accounts while customers are on board, validate addresses for sending and collecting money,
and provide phishing protection using whitelist APIs.
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The below figure shows the high-level architecture of UPI.
Some of the key APIs to enable UPI transactions are:
1) Payment API:
These are the primary APIs used to route transactions and are used to initiate payment requests (push
payments) and collect requests (pull payments). APIs contain information about clients and recipients.
2) Authentication and Address Translation API:
These are used to obtain the proper authorization details and convert a given virtual payment address to a
common global address (bank account number and IFSC code, Aadhaar number). This allows users to
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easily provide such virtual (tokenized) addresses to other users (individuals, organizations, etc.) without
revealing their actual account details.
3) Key List API:
These APIs enable secure collection and transmission of credentials for authenticating transactions by
various entities within the UPI ecosystem. These APIs are used to request and cache lists of public keys
from account providers and other entities. Trusted and certified NPCI libraries and utilities are used to
collect these credentials and encrypt his PKI public key during collection.
 Virtual Payment Address
Each payment transaction requires senders (remitters) account details for debits and destination
(recipient) bank details for credits. UPI allows users to create a virtual payment address (UPI ID) for their
bank account. This virtual payment address is an abstract form used to represent and uniquely identify
bank account details in a normalized notation. Therefore, in order for transactions to take place, it is
imperative that virtual payment addresses resolve to real bank accounts in order to carry out debit and
credit transactions.
In this current UPI architecture, virtual payment addresses are called "xyz@psp" format. “Xyz” is an
arbitrary unique name and “psp” is the name of the application payment service player that the user uses
to create their VPA. The virtual payment address is created by the payment service provider's UPI app
and stored in the payment service provider's database, while the bank account number and IFSC code
(global address) are stored in the NPCI mapper. PSP uses NPCI to expose address translation
algorithms so that VPA can be decoded into valid bank account information. Therefore, the virtual
payment address is resolved by the respective PSP UPI app, while the account number and IFSC code
are resolved to the virtual payment address by the NPCI Central Mapper. This is a unique feature of UPI
as it does not require knowing the full banking details of the parties conducting the transaction.
Users can exchange their Payment Address which is sufficient to make the transaction.
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 Trading on UPI
As mentioned above, UPI allows for a variety of non-financial and financial transactions. Following are the
two types of financial transactions:
1) Payment request (Push Payment):
This transaction is initiated by a user where funds are pushed into the beneficiary's bank account. Those
Push Payments can be made using the recipient's account number and their IFSC code, Aadhaar number
or virtual payment address.
2) Collect Request (Pull Payment):
The Collect Request transactions are initiated by the beneficiary to withdraw funds from the payer using
the virtual address. Users can also define an expiration time for collection requests. Payers receive
collection requests in the PSP UPI app. One will need to authenticate with their 4–6-digit MPIN to
complete the transaction.
 Trading Parties to UPI
A UPI system can have up to four transaction parties. These four parties are two PSPs (one each for
originator and beneficiary) that provides a UPI interface via the PSP-UPI mobile app, and two banks (one
each for originator and beneficiary). Two PSPs facilitate transactions, allowing you to debit the sender's
bank account and credit the recipient's bank account.
 Transaction Approval
All digital transactions in India must comply with two-factor authentication. With UPI, transactions are
authorized and authenticated on the user's personal mobile phone without the need for an external device.
The first factor is the mobile device's hard-bound fingerprint, authenticated by the PSP UPI app. The
second factor to authenticate the transaction is his 4–6-digit MPIN, created by the user and captured by
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the NPCI
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library built into the PSP UPI app. These libraries are available for all major mobile operating systems.
Android, iOS, and Windows. These libraries enable secure collection of credentials such as OTPs and
MPINs. Secure credentials are harvested from the NPCI library, which uses PKI encryption. These
Protected Credentials (MPINs) are sent to the issuing bank for authentication, and upon successful
authentication the transaction is completed.
 UPI Payment Transaction Flow
1) Customer Registration
a) Users can download their PSP UPI application in their mobile phone from app search platforms such as
Google Play and Apple App Store and register with the bank using their phone number.
b) The PSP-UPI application will automatically send an encrypted outbound SMS from the user's mobile
phone to verify the authenticity of the user's bank-registered mobile phone number and verify the mobile
phone number and mobile device which enables strong binding of the device with the phone number. This
device binding acts as the device's fingerprint.
c) User can create a unique virtual payment address (e.g., abc@xyzbank) which is the user's unique payment
ID.
2) Bank Account Registration
a) User can register bank account in PSP UPI app. The issuing bank authenticates the mobile phone
number registered with the bank and provides a list of all bank accounts registered to the mobile phone
number provided to the user in the PSP UPI app.
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b) PSP stores the account details received from the issuing bank in its database. At this stage, the PSP
database contains information such as registered mobile phone number, virtual payment address, PSP UPI
app username, bank name, account number and IFSC code.
c) User must create a Mobile Personal Identification Number (MPIN) to authenticate the transaction. The
PSP UPI app will generate an OTP request to NPCI for the newly added account. NPCI requests the OTP
from the issuing bank, and the issuing bank sends the OTP to the user's registered mobile phone number by
an SMS.
d) To establish the user's personal authenticity, the user will be asked to enter the last 6 digits of the debit
card number and expiration date, and then an OTP will be generated against the registered mobile
number. To create an MPIN, the user enters their desired MPIN into the NPCI library. This will be
embedded in the PSP UPI app.
e) Card details and the OTP are authenticated by the issuing bank and the PSP application of UPI sends
this MPIN to NPCI. The NPCI sends it to the issuing bank by encrypting it with its public key using PKI.
The issuing bank decrypts the encrypted MPIN with its private key and verifies the MPIN configuration.
3) Transaction flow
a) To make a push payment (payment request), the user must enter a virtual payment address or account
number and IFSC code or the Aadhaar number of the payee.
b) User enters the MPIN into the NPCI library built into the PSP UPI app. The MPIN is sent to UPI
encrypted with the NPCI public key and decrypted with the NPCI private key. NPCI re-encrypts this
MPIN using the issuing bank's public key and sends it to the issuing bank. The issuing bank decrypts the
MPIN using its own private key. The issuing bank then authenticates the MPIN, debits the payer's bank
account, and credits the recipient's bank account.
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c) Similarly, for pull payments (collection requests), the user enters the payer's virtual address to make a
collection request. The beneficiary's PSP UPI app sends the request to NPCI, which in turn sends the
request to the sender's PSP for resolution and approval.
d) Payer must enter the MPIN into the Payer PSP UPI App to authenticate the payment. Upon successful
verification of the MPIN by the issuing bank, the amount will be debited from the payer's bank account
and immediately credited to the payee's bank account.
 UPI Security
India requires two-factor authentication to be enabled to conduct digital transactions. Two-factor

authentication means that one component is required to establish a person's true identity, and the second
component consists of passwords/credentials known only to the user. UPI uniquely uses this one-click
two- factor authentication system, which allows users to authenticate both authentication factors with just
one click. A mobile device's fingerprint is used as the first factor in authentication to determine a user's
actual identity.
The most important security aspect is binding the mobile phone number to the device when profiling the
user in the PSP UPI app. This is done by sending an encrypted outgoing message from the bank of the
mobile phone number registered by the user. This message creates a device fingerprint for the user's phone
by associating the mobile phone number with the device ID, IMEI ID, SIM number, and PSP app ID. If
any changes are made to the mobile fingerprint, mobile phone number, device ID, IMEI ID, SIM number
or PSP app ID, the user will be required to re-authenticate the mobile device. The second authentication
factor is her 4–6-digit MPIN that the user creates and uses to authenticate the transaction.
For data security, data has been classified into different classes of information:
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1) Sensitive Data:
Such data cannot be stored and can only be transferred in encrypted form. Sensitive data includes
passwords, PINs, biometrics, etc.
2) Personal Data:
Data such as bank account numbers. Personal data can be stored on the PSP, but only in encrypted form.
3) Non-Confidential Data:
Data such as name, transaction history, etc. i. H. Amount, time stamp, response code, location, etc. Can be
saved without encryption.
In the current UPI architecture, security is being handled in the following ways :
1) Identity and Account Verification:
Personal identity and bank account authenticity are verified as a first step during user registration. This is
done by the PSP UPI app by automatically sending outbound SMS without customer intervention. This
outgoing SMS is sent in an encrypted format from a mobile phone number and is authenticated by the
issuing bank to verify that it is a registered mobile phone number of a user with a valid bank account at the
bank. The PSP UPI app enables device fingerprinting via this automated external encrypted SMS that
permanently binds a mobile phone number to the device. This protects the transaction originating from
the tethered device itself in the first step.
2) Application Security:
Each PSP UPI app is certified by “Payment Card Industry Data Security Standard"(PCI-DSS) and RBI.
NPCI utilities and libraries are built into the PSP UPI app, and sensitive data such as MPIN and one-time
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passwords (OTP) can only be entered into these NPCI utilities and libraries. The encrypted credentials are
base 64 encoded by the shared library and returned to the PSP application via UPI for further transport.
3) Transaction Level Security:
Transaction authorization and authentication stay crypted between the PSP UPI app and the issuing bank.
The PSP UPI app verifies the first factor of authentication, the device's fingerprint. To authenticate each
transaction, the user must enter the 4–6-digit MPIN which is authenticated by the issuing bank. The
transaction can only be completed when the device fingerprint and MPIN are verified. Users have full
control over unwanted and malicious payment requests. The user must personally enter the MPIN to
authorize the transaction and initiate the withdrawal from the bank account.
4) MPIN security:
MPIN can only be captured with the NPCI library i.e., with the NPCI interface built into the PSP UPI app.
This interface comes up while entering the MPIN for interoperable transactions. The MPIN will be sent
by NPCI to the issuing bank via a secure channel. Using the Public Key Infrastructure (PKI) cryptography
system, UPI encrypts the MPIN using the public key and the MPIN is decrypted by the issuing bank using
the private key.
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1.10 IMPACT OF UPI ON PAYMENTS INDUSTRY
UPI has grown rapidly since its launch in August 2016 in terms of number of users, volume, and value of
transactions. Currently, 385 banks are running on the UPI platform and more than 60 PSP UPI apps are
available on app discovery platforms. Within 12 months of UPI launch, more than 20 million users have
downloaded various UPI PSP applications. The total value of UPI transactions has grown tremendously
since its launch, totalling Rs. 12,98,726.62 crores by January 2023. The monthly value of UPI
transactions has already surpassed the monthly transactions of all connected e-wallets in India. UPI has
overtaken debit/credit card transactions and continues to grow at a much faster rate.
UPI Transactional Growth
For December 2023, UPI payments in the country touched 83.75 billion transactions with payments worth
Rs 18.23 lakh crore being processed by the service during the month. This represented a 54% year-on-year
growth in terms of volume and a 42% growth in transaction value annually. Total transactions processed by
UPI in 2023 stood at 117.6 billion. Further, the UPI rails also witnessed a little over Rs 182 lakh crore in
total value being processed through the payments infrastructure last year, data showed. This shows a
staggering growth for UPI payments service in the country which recorded around 74 billion transactions
in 2022 and 38.7 billion transactions in 2021.Further, monthly transactions on UPI have seen an over 49%
jump, between January to December, last year, data from NPCI showed. So, growth is still possible, and
UPI will be the core driver of this.
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With UPI as a payment method, debit cards could become obsolete because you wouldn’t need to carry
one around since your phone would act as your debit card. However, UPI as a product does not compete
with credit cards because it does not currently support credit cards. UPI definitely provides a superior user
experience for online payments than debit cards or net banking.
 Impact on Payments in Physical World:
In the real world, payments are made with cash and with debit or credit cards. UPI offers a more affordable
alternative to cash and transactions, which has the potential to revolutionize offline payments. With UPI,
businesses don’t need pricey POS terminals to accept digital payments made with credit or debit cards.
Instead, they may display a special UPI QR Code that customers can use to pay instantaneously into the
business’s bank account by scanning with their smartphones. Over their cell phones, the merchant can get
a confirmation of the payment, or they can install a small voice box as well which would help with voice
payments. Due to the lack of digital acceptance capabilities among retailers, cash transactions still
dominate at the merchant point.
 Impact on Online Payments:
Payment gateways currently facilitate the majority of online transactions, with debit/credit cards and net
banking serving as the two main payment methods. Users are needed to enter all of the private
information, such as card numbers, usernames, and passwords for online banking, etc. Digital payments
are thus susceptible to fraud and data breaches. Additionally, there are numerous network hops involved
between card networks, the issuer, and the acquiring bank in order to permit a transaction, which
increases the likelihood that it may fail. Customers that use UPI do not need to supply any information; all
they need to do is use a smartphone to scan a QR code shown on the website, and the payment will be
processed quickly across a few networks.
As UPI transactions replace cash transactions, the circulation of physical currency decreases, reducing
the costs and risks associated with cash handling.
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 Impact of UPI on Businesses:
In addition to being the most efficient, quick, and seamless mode of payment, UPI enables digital
payments for a wide range of enterprises, including both offline and online retailers. Since there is no
need for a POS machine in physical businesses, each employee can be equipped to accept digital
payments. Instead, they can be given a unique UPI ID and QR Code that they can show to customers to
obtain payment. UPI creates exceptional chances for businesses to collect payments where customers are
not physically present, in addition to proximate payments where customers are present at the billing
counters.
For example, collecting insurance premiums, paying school or utility bills, etc., you can send payment
requests to your customers and let them pay remotely using their mobile phones. Another important use
case for businesses is payment on delivery. Cash on delivery is very popular in India, where nearly 60%
of e-commerce sales are cash on delivery. Such on-delivery payments can be converted to digital
payments on- delivery using UPI, allowing customers to easily pay via UPI on-delivery.
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1.11 THE WAY FORWARD—UPI 2.0
UPI experienced rapid growth due to an expanding ecosystem and increasing user adoption, facilitated by
banks and other payment service providers. Security, usability, and business solution development are
paramount to making UPI the payment system of choice for both users and businesses. In this direction,
NPCI released an updated version of UPI in 2018 called UPI 2.0 to improve security and customer
usability, open new use cases for businesses and expand the UPI ecosystem.
The salient features of UPI 2.0 are as under:
 Transaction authentication using Biometrics:
Currently, users can authenticate payments with a 4–6-digit MPIN. This MPIN can be created by the user
himself in the PSP UPI app with the option to change his MPIN if desired. This MPIN is obtained by the
secure NPCI library and authenticated by the issuing bank. However, this use of his MPIN has its own
limitations because if the user forgets his MPIN and enters an incorrect his MPIN, the transaction will
fail. Another perceived risk is the fear of fraudulent transactions if a mobile phone is lost or stolen. To
solve these problems, UPI 2.0 includes transaction authentication using user biometric data such as
fingerprints and iris prints.
Users have the option to authenticate transactions using biometric data. To enable biometric
authentication, UPI is integrated with India’s Unique Identification Authority (UIDAI), which provides
online authentication services including biometric and OTP authentication. UIDAI is a central repository
of biometric data. Over 1.16 billion or approximately 87% of Indians have enrolled in the National
Unique Identity Service through Aadhaar. Also, the user’s Aadhaar number is now mandatorily associated
with the user’s bank account.
Mobile phone manufacturers are developing mobile phones that can read the user’s fingerprint and iris.
Such devices must be certified and registered with UIDAI in order to obtain user biometrics. When a user
decides to use biometrics to authenticate a transaction, a fingerprint or iris print is captured by their
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mobile
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phone and sent in an encrypted form to the NPCI. NPCI calls this UIDAI authentication API on behalf
of the issuing bank to verify that the biometric is authenticated.
 UPI Payment Mandate:
One of the biggest use cases for consumers and businesses is recurring payments such as utility bills,
school fees, insurance premiums, and EMI loan payments. To enable businesses to accept recurring
payments and provide customers with a hassle-free experience, UPI 2.0 includes the ability for a customer
to make his recurring payments across various merchants and billers. There is a feature that allows you to
provide one- time authentication. Although creating a power of attorney is his one-time activity, the
transaction can be debited from the user’s account according to the agreed terms without the user having
to authorize the transaction each time. UPI provides delegated services. This will allow both originators
and beneficiaries to create mandates. This delegation should be registered immediately after one-time
authentication by the client.
In simple words, UPI mandate is to be used in scenarios where money is to be transferred later, however the
commitment towards that is to be done now. It is possible that the sender may forget to send money later so
creates a mandate or for a service/merchant payment wherein this functionality may be required.
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1.12 WORLDWIDE ACCEPTANCE
 Domestic
 India
Since 2020, various OTT platforms such as Hotstar, Netflix and Amazon Prime have enabled UPI
payments. In 2021, Hotstar and Netflix integrated the UPI AutoPay feature for Indian subscribers, which
was earlier limited to credit and debit cards only. Various platforms that offer a subscription model have
since switched to UPI AutoPay. Play Store and App Store also have this UPI enabled feature for
purchasing apps and in-app content. Due to high usage, Samsung Electronics has integrated UPI barcode
scanner directly into the mobile camera application for faster payments.
With UPI, India maintains its position as the global leader in instant payments, accounting for 46% of all
global instant payment transactions in 2022. As of November 2022, the platform had over 300 million
monthly active users in India.
 International
Cross-border digital payment service provider Liquid Group signed a Memorandum of Understanding
(MoU) with NPCI International Payments Limited (NIPL) in September 2021 to enable UPI-based QR
code payments in Singapore, Malaysia, Thailand, Philippines, and Vietnam launched the system.
Cambodia, Hong Kong, Taiwan, South Korea, and Japan from 2022. This is useful for cross-border multi-
currency transactions. As of 4 July 2022, India has already started talks with 30 countries on their UPI
integration.
The unified Payments Interface (UPI) is steadily becoming globally attractive amid measure to enable
seamless cross-border transactions. This is lowering cost of fund transfer and remittance payments.
 Bhutan
On 13th July 2021, UPI was made available in Bhutan by the Royal Monetary Authority of Bhutan. Bhutan
is the first country to accept the UPI transactions through the BHIM app.
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 France
An MoU was signed by NIPL with a French payment company Lyra Network, which will help Indian
tourists and students to make transactions via UPI in France.
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1.13 SWOT ANALYSIS
What Is a SWOT Analysis? SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a
SWOT analysis is a technique for assessing these four aspects of your business. SWOT Analysis is a tool
that can help you to analyze what your company does best now, and to devise a successful strategy for the
future .Individual and organizational effectiveness analysis aids in the recognition of numerous obstacles
and the exploration of new growth opportunities. This can be done by employing SWOT analysis. “SWOT
analysis is an effective strategic tool that can be used efficiently and resourcefully to assess the strengths,
weaknesses, opportunities, and threats of businesses”.
 STRENGTHS:
The strengths of UPI platform are as follows:
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 Caters to Bottom of the Pyramid:
With UPI, even small business owners can start accepting digital payments without the need for POS
devices in India, where the payment infrastructure for accepting digital payments is poor. UPI eliminates
the need for trading parties to know complex payment details, making payments convenient and
transparent for all involved. UPI runs on a safe, stable, and robust platform with numerous security
features that make it safer than any other payment system in use today. UPI’s biometric authentication not
only makes payments more reliable, but also represents a major step forward in integrating next-
generation technology into current payment systems. UPI has the potential to become a major facilitator
of financial inclusion in India, enabling a large segment of the population to participate in the digital
economy.
 Corruption Deterrent:
In developing countries, digital financial transactions can help reduce corruption and reduce contagion
from parallel economies.
 Simplified Payment Mechanism:
Mobile phones can be used as the primary payment mechanism for all transactions including P2P, P2B
and B2P.
 Pay & Collect:
Users can use their mobile phones to “pay” (push) and “collect” (pull) money from others.
 Multiple payment options:
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Multiple identifiers, such as customised Virtual Payment Address (VPA), 12-digit AADHAR Number
allotted by Unique Identification Authority of India (UIDAI) or Bank Account Number, and Indian
Financial System Code (IFSC) can be used to make payments.
 Notified of Future Payment:
Ability to send collect requests to someone with a “pay by” deadline (i.e., P2P or B2B). It sends a
“snooze” notification to the payer, allowing them to pay before the expiration date. It does not hold
money in the account until the consumer has paid it.
 Open usage:
Ability to use a completely interoperable system across all payment system players without relying on
closed networks and silos.
 WEAKNESSES:
The NPCI’s UPI platform has the following weaknesses:
 Delayed Transaction:
Payment settlement may be delayed due to technical glitches, leaving a transaction to be interrupted.
 Irritation on Double verification:
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Two-factor authentication like mobile and PIN verification may irritate the users.
 Requirement of cooling period:
Payments done through means other than VPA, such as Account Number and IFSC, are subject to the same
cooling period as NEFT/RTGS transactions.
 Cybercrimes:
The main drawback of using UPI is that banks do not support customers with security issues. Most
scammers these days require you to transfer money via UPI. One should be careful while trading via UPI.
 OPPORTUNITIES:
The opportunities available for UPI are:
 Strong Banking Network:
A strong Banking network, and the launch of Digital India especially after demonetization, propelled the
country towards a cashless economy.
 Internet Penetration:
Most of the country’s population lives in semi-urban and rural areas. The potential consumer base in these
regions will increase as internet and mobile phone usage increases.
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 Widening the scope of services:
Initially, UPI was used for fund transfers between bank accounts. Presently it is providing a wide range of
digital payment services such as bill payments, investments, insurance, donations, handling overdraft
accounts, one-time payment mandate, etc.
 THREATS:
The following are the obstacles that UPI must overcome:
 Awareness:
UPI usage awareness creation among the rural and illiterate population of the country is most challenging.
 Cash is the King:
Even though many e-commerce sites have adopted digital payment methods, consumers still prefer to pay
with cash. This trend is linked to concerns about cybersecurity in digital transactions.
 Emergence of FinTech players:
Strengthening of the traditional Banking system to compete with tech generation companies i.e., FinTech
Players.
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 Grievance redressal:
Pathetic Grievance redressal system for transactions performed over UPI platform.
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CHAPTER 2. RESEARCH METHODOLOGY
A research methodology is a method of finding the results of a particular problem on a particular topic or
problem, also known as a research problem. In methodology, researchers use different criteria to solve/find
a specific research question. Different sources use different methods to solve the problem. When we think
of the word ‘methodology’ it is a way of exploring or solving a research question. Here the research has
been undertaken to study the transactions occurring via UPI on a daily basis.
2.1 OBJECTIVE OF STUDY
1) To know which UPI apps are commonly used.
2) To study the user’s perception about digital payment applications.
3) To study the opportunities and challenges for digital payment applications.
4) To study the importance of digital payment applications in e-commerce.
5) To know the primary reason as to why people, prefer UPI over cash.
6) To study about awareness of UPI payment among students.
7) To know the awareness and the use of UPI services.
2.2 SCOPE OF THE STUDY
With the improvement in the digitization of our economy and how post demonetization people have
adapted to online payments much more freely and with that we get to see the improvement in our lifestyle
and the
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number of mobile phone users have definitely increased pertaining to an increase in online payments.
With just a scan of an QR code, a payment could be made hassle-free. It has become so easy to make
online payments.
The study will help us to know what are the factors that are considered by people before opting for online
payments and it gives us an insight as to what they actually feel about it.
It will also help to gather various information about UPI and will act as input to those who want
additional information.
2.3 NEED FOR STUDY
a) The study helps NPCI. To appreciate the factors that lead to the user’s satisfaction.
b) The study helps to understand consumer’s attitude towards UPI and its services.
c) The study also helps NPCI to obtain suggestion regarding improvement in the service provided.
2.4 SAMPLE SIZE
The sample size consists of 100 people.
The sample area used for research is Vasant Vihar & Wagle Estate , Thane (W).
A total of 20 questions were asked to the people living in Vasant Vihar & Wagle Estate, Thane (W).
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2.5 COLLECTION OF DATA
I. Primary Data
Primary data has been collected by means of a survey which consisted of 20 questions formed as a type of
questionnaire to the people residing in the sample area.
II. Secondary Data
This involves data collected from websites, research papers, etc.
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CHAPTER 3. REVIEW OF LITERATURE
A detailed review of literature has been made to find out the research gap and to identify the relevant
researchable issues for the study. It is essential for a research scholar to review the related literature study
to have clear knowledge about the subject and understand the research gap in order to draw the scope for
the study.
Karamjeet Kaur, Dr. Ashutosh Pathak (2015), in their research paper entitled “E-payment system on E-
commerce in India” they found that becoming a successful business in the digital payments industry
largely relies on factors such as ease of use, app interface, preferences, feasibility, accessibility, services
and cost.
Prof Trilok Nath Shukla (2016), in their research paper entitled “Mobile Wallet: Present and the Future”
he found that digital payments will greatly contribute to future customer shopping experiences. Providing
security and an easy-to-use payment system is not enough to attract customers, aside from the fact that
you should offer things like cashback and loyalty programs. Marketers should seize this opportunity by
working with various digital payment companies to attract customers.
Rahul Gochhwal (2017) in his paper “Unified Payment Interface—An Advancement in Payment
Systems” he concluded that UPI enabled mobile phones to be used as the primary payment device for
receiving payments. UPI takes advantage of India’s high communication density to enable bank account
holders to use their mobile phones to conduct digital transactions. In India, where payment acceptance
infrastructure is inadequate for merchants, even the smallest merchant can start accepting digital
payments without the need for his POS device.
Roshna Thomas & Dr. Abhijeet Chatterjee (2017) in their paper “UPI – A Catalyst Tool for Supporting
Digitalization” they see UPI as a catalyst tool to support digitization and through their research they have
discovered the benefits, prospects, and problems of UPI payments. In their opinion, the main challenge
for UPI implementation is financial inclusion. This is because most of the rural population does not have
access to the banking sector. Another challenge for them is mobile services as even today it does not
reach many people. To overcome these situations, wallets were not allowed to offer UPI services as they
communicated with banks with which the customer could link his UPI.
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Sasi Desai, Nipun Jasuja and Piyush Khandekar (2017), UPI leads to a unified, secure, and cost-effective
payment user interface. Before UPI, hard cash was the only payment system that exhibited this behaviour.
And in a society where 95% of transactions are still cash-based, digital cash will only be adopted if it
offers the same convenience. UPI takes the status quo rails, the status quo infrastructure and ties them all
together. Such an interoperable system lays the foundation for the free conversion of physical cash to
digital cash, making the need for physical cash obsolete. UPI has the potential to completely change the
face of the nation.
K. Suma Vally and K. Hema Divya.(2018) in their Paper “A study on Digital Payments in India with
Perspective of Consumers Adoption” they concluded that the adoption of digital payment technology
can improve the performance of the banking sector and achieve the cashless national incentives. The
survey also highlights the percentage of awareness of making the most of technology. Banks should take
effective steps to raise awareness of the effective use of technology and security.
Salil Panchal and Manu Balachandran (2018), UPI’s success is proof that India is moving mountains to
become a cashless economy pioneer. However, the scope of BHIM needs to be expanded. BHIM should
add more user interaction categories to their payment application. UPI is IMPS’s “sophisticated”
product, and it is predicted that he may eventually be integrated with his NEFT system operating under
RBI guidelines.
Shruti Arcot Kesavan (2018), With the release of UPI 2.0 on August 16, 2018, more merchant
transactions, previously limited primarily to peer-to-peer (P2P), will take place. UPI transactions are
expected to account for 50% of digital transactions by March 2023. It is expected to grow 90% annually
over the next five years to $400-450 billion annually.
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CHAPTER 4. DATA ANALYSIS AND INTERPRETATION
Percentage analysis is one of the descriptive statistical measures used to describe the
characteristics of the sample or population in totality. Percentage analysis involve computing
measures of variables selected of the study and its finding will give easy interpretation for the
reader.
Since Question number 1,2 and 3 are about the introduction of the respondents. They are not
involved here.
Question 4. Who introduced you to UPI?
Options No. of respondents Percentage

Friends 35 35%
Family 29 29%
News & 25 25%
Advertisements
Social Media 11 11%

Grand Total 100 100%
Interpretation: The above pie chart states that majority of the respondents were introduced to UPI by their
friends and the least were introduced via social media.
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Question 5. Are you aware of UPI?
Fully aware 77 77%
Partly aware 21 21%
Heard about it 2 2%
Not at all - -
Interpretation: As per the survey it shows that 77% of the respondents are fully aware of UPI whereas
21% are partly aware and the remaining have just heard about it.
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Question 6. How often do you use UPI?
Always 58 58%
Sometimes 34 34%
Rarely 6 6%
Never 2 2%
Interpretation: The above pie chart shows that maximum respondents “Always” use UPI over cash. The
remaining either “Sometimes” or “Rarely” opt for UPI over cash.
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Question 7. Which UPI platform do you prefer to use?
Google Pay 69 69%
BHIM 10 10%
PhonePe 11 11%
Paytm 10 10%
Interpretation: The above chart shows that majority respondents prefer using Google Pay as a means for
UPI platform whereas the remaining 3 i.e., BHIM, PhonePe and Paytm are somewhat preferred by an
equal number of respondents.
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Question 8. What is your primary reason for using these apps?
Easier access than cash 63 63%
Easier to track 15 15%

transactions
Quick access to bank 11 11%
account
Security 11 11%
Interpretation: The above pie chart shows that maximum people prefer UPI because they have easy access
to their money rather than cash whereas access to bank account and security account for the least when
primary reason is being undertaken.
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Question 9. For what services do you use these apps?
Fund Transfer 6 6%
Bill payments 17 17%
Shopping 14 14%
Multipurpose 63 63%
Interpretation: The above chart shows that majority of the respondents use these apps for multiple
services and the minority prefer these apps for fund transfer where only 6% of respondents use UPI for
Fund Transfer.
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Question 10. Why do you prefer paying through these apps?
Convenience 73 73%
Cashback offers 8 8%
Shortage of currency 8 8%
Better user experience 11 11%
Interpretation: The above pie chart shows that maximum respondents prefer using these apps because
they are convenient and the minimum lean towards cashback offers and shortage of currency and better
users experience.
5
Question 11. Do you believe that UPI transactions are safe?
Yes 62 62%
No 5 5%
Maybe 33 33%
Interpretation: The above chart shows that 62% of the respondents feel that UPI transactions are safe
whereas 33% are unsure whether they are safe or not and the remaining 5% feel that they are unsafe.
5
Question 12. Are you able to comfortably carry out UPI transactions?
Yes 91 91%
No 3 3%
Maybe 6 6%
Interpretation: The above pie chart states that maximum respondents can carry out their UPI transactions
comfortably whereas a small portion of respondents feel that they are still not comfortable with UPI
transactions.
5
Question 13. Do you prefer UPI over cash payments?
Yes 91 91%
No 12 12%
Maybe 17 17%
Interpretation: The above chart shows that majority of the respondents prefer UPI over cash payments.
Whereas the least percentage of respondents feel that *Cash is king* and it cannot be replaced by UPI.
6
Question 14. On a scale of 1 to 10. How efficient is UPI?

1 4 4%
2 3 3%
3 2 2%
4 1 1%
5 9 9%
6 3 3%
7 9 9%
8 25 25%
9 28 28%
10 16 16%
Interpretation: The above chart shows that majority of the respondents feel that UPI is an efficient mode
of payment.
6
Question 15. Since how long have you been using UPI?
Past 6 months 8 8%
6 months to a year 13 13%
1 – 3 years 51 51%
More than 3 years 28 28%
Interpretation: The above pie chart shows that 51% i.e., the majority of the respondents have been using
UPI for about 1 – 3 years and 8% i.e. the least have been using UPI for not more than 6 months.
6
Question 16. Which mode of payment/fund transfer do you prefer the most?
Cash 13 13%
NEFT/RTGS 29 29%
UPI 55 55%
Digital wallets 3 3%
Interpretation: The above pie chart states that majority of the respondents prefer using UPI as a mode of
payment. The second most preferred is NEFT/RTGS and the least are Cash and Digital wallets.
6
Question 17. Are you aware that UPI transaction limit is Rs. 1 lakh (daily limit)?
Yes 56 56%
No 38 38%
Maybe 6 6%
Interpretation: The above chart shows that 56% respondents are aware about the daily limit of UPI
transactions whereas 38% don’t know and the remaining 6% feel that it might/might not be Rs.1 lakh.
6
Question 18. What problems have you come across while operating UPI?
Transfer issue 12 12%
Bank related issue 12 12%
Server related issue 68 68%
Security issue 8 8%
Interpretation: The above pie chart states that majority of the respondents come across *server related
issues* when it comes to availing UPI services whereas the minority come across *security issues*.
6
Question 19. Have you been a victim of fraud while using UPI?
Yes 7 7%
No 93 93%
Interpretation: The above chart shows that UPI can be called as a safe mode of payment when it comes to
online transactions because maximum respondents feel that it is safe. There are very less chances of it
being compromised.
6
Question 20. What is your biggest concern regarding cashless payments?
Security 55 55%
Merchant Acceptance 11 11%
Poor internet connectivity 28 28%
Technical know-how 6 6%
Interpretation: The above pie chart states that almost half of the respondents feel that security is their
biggest concern considering cashless payments. Whereas the rest have mixed opinions, in that as well
the second most weighted concern is poor internet connectivity.
6
Question 21. What is your perception towards UPI payments?
Positive 66 66%
Negative 1 1%
Neutral 33 33%
Interpretation: The above chart shows that maximum respondents are positive about UPI payments in the
future.
6
Question 22. Are you satisfied by the service provided by UPI?
Yes 81 81%
No 16 16%
Maybe 3 3%
Interpretation: The above pie chart shows that majority of the respondents are satisfied with the service
provided by UPI.
6
Question 23. Will you be using UPI in the future as well?
Yes 86 86%
No 1 1%
Maybe 13 13%
Interpretation: The above chart states that 86% i.e. maximum respondents are willing to use UPI in the
future as well.
7
CHAPTER 5. CONCLUSION & SUGGESTIONS
5.1 FINDINGS :
 If you're sending cash from UPI app, then the receiver ought to sign into the UPI app at his end.
Otherwise, you can't send money with the aid of using cell range. Or else the user has to opt for the
traditional method of gathering the account number, IFSC code and other details which sometimes
becomes a hassle.
 UPI still remains in its introductory stage because it has still not penetrated the rural areas. Major
problems like server issue still prevail.
 There isn't any separate customer care line for consumers. If any mishap were to take place, a
consumer cannot directly contact which becomes an inconvenience.
 UPI is in its preliminary stage, so maximum banks are adopting this tech and this leads in trouble
in preserving servers 24 hours.
 UPI particularly targets smartphone customers and the volume of smartphones are growing every
day, however the digital literacy is just too less. This will have an effect on the UPI.
 Till now, there's no transaction price however for maintaining servers and for different
infrastructure facility banks might also additionally begin charges.
 UPI particularly calls for Internet connection however in India, data connection isn't always
available everywhere.
 Most consumers use UPI not only for bank transfers but also on a daily basis to meet their regular
expenses.
 At times, managing hard cash becomes a hassle. So, UPI is an excellent substitute for this.
7
5.2 CONCLUSION:
After conducting the research work by means of a questionnaire for the common people of the
selected region and understanding their various preferences and choices of answers to various
questions relating to UPI, it is concluded that majority of the people are satisfied with the service
provided by UPI. Most consumers would continue using UPI apps in the future as well. A very small
percentage of people were not satisfied with the service provided by UPI. A good chunk of
respondents still feel that cash is king and hence it cannot be replaced even if our economy goes
digital thoroughly.
UPI enabled mobile phones to be used as the primary payment device for receiving payments. UPI takes
advantage of India's high telecommunication density to enable bank account holders to conduct digital
transactions using their mobile phones. In India, where payment acceptance infrastructure is inadequate for
merchants, even the smallest merchant can start accepting digital payments without the need for the POS
device. UPI eliminates the need-to-know complex payment details for trading parties, making payments
easy and seamless. It is no exaggeration to say that UPI is the most advanced payment system in the world
compared to all other payment systems. UPI uses a standard set of APIs to allow different banks to
communicate with each other and enable interoperability between different banking payment systems. UPI
has no intermediaries like card networks, resulting in low transaction costs and instant settlement. While
all other digital payment methods such as NEFT, RTGS, etc. take days to complete the transaction and
payment process, UPI can process payments in seconds. UPI runs on a secure and robust platform with
numerous security features that make it safer than existing payment systems. The introduction of
biometrics at UPI not only makes payments more secure, but also takes a giant leap to integrate next
generation technology into current payment systems. UPI will be a major enabler of financial inclusion in
India, enabling a large demographic to become part of the digital economy.
 Currently India is growing about 8 to 9% annually .We understand that cashless transactions will
honestly lessen or forestall the load of circulating hard cash in the country.
 From above study, it can be concluded that UPI will actually change the manner we're transacting
now and transform into virtual bills wherein every person's smartphone may be the number one
tool for all the bills.
7
 UPI is in its preliminary stage. When UPI would completely become an operational approach
whilst all of the banks be part of the UPI then it might be extensively useful for the banking zone
and the customers in terms of sending and receiving money.
 We understand that during recent times, there has been a substantial increase in smartphone users
and the penetration of the internet in rural services. This leads to a large capacity for adoption of
UPI through Indian customers.
 UPI creates comfort of transacting without the need-to-know bank information. It has been
developed with an exceptionally easy architecture so that anyone can cope up with it easily. From
all above factors we are able to put out that UPI will steadily cease the cash bills and decrease the
flow of hard cash. This will result in a cash less economy.
Until now, governments have left wallet players out of the game, leaving the responsibility of running UPI
services solely to banks. With this, banks see a huge opportunity to leverage consumer transactions. This
is largely due to accountability and reliability that have long been part of culture and commerce.
Due to banking tradition, people have always trusted banks to manage their hard-earned money. It's clear
that people are putting more trust in banks compared to private companies that provide mobile wallet
services. Banks should therefore optimize this trust and effectively support and promote the UPI platform.
A smooth and secure payment ecosystem for customers.
7
5.3 SUGGESTIONS:
 Reducing server and application problems may help in increasing the number of UPI users.
 Conducting awareness programs can also help increase customer numbers.
 UPI must offer attractive offers, such as cashback for bookings or other payments. That
way people can suggest or recommend others.
 UPI usage is lower among women and can be increased by implementing awareness programs
at women's colleges.
 Most people still don't know UPI. Therefore, awareness should be created through advertising
and awareness programs so as to make people familiar with it.
 UPI needs to focus on new ways to help illiterate people understand UPI.
 Internet connectivity needs to be strengthened in many areas, especially the rural areas.
 Digital literacy awareness campaigns should be conducted as many people are being scammed in
one way or another.
 A very big advantage of UPI is that the money we send or receive goes directly into our bank
account. With digital wallets like Paytm, payments and cashbacks remain in the wallet. These
typically include fees for sending money to your bank account. This fact must be properly
communicated to potential customers. As more people understand this, we will see a shift to
UPI payments.
 The initial increase in UPI usage was largely due to the demand generated after demonetization,
but sustaining this growth would be similar to what digital wallets have done by adding multiple
use cases to their score. As such, the industry should create multiple use cases for UPI payments.
 UPI should offer merchants a greater value proposition such as loyalty programs that bring UPI
to the peer-to-merchant space, post-sale analytics, merchant reviews, systematic savings, etc. and
more .
7
5.4 LIMITATIONS:
Since the road to improvement is never ending, so this study also suffers from certain limitations. Some of
them are as follows:
1. The scope of the project is limited in the sense that only UPI has been taken for consumer research.
2. The extent of the survey was Vasant Vihar & Wagle Estate only. So, the suggestions or arguments given
in the report may not hold true for other location in India.
3. Questionnaire method involves some uncertainty of response. Co- operations on the part of
informants, in some cases, was difficult to presume.
4. Also because of above-mentioned constraints, the sample size chosen for the survey was 100 people.
5. It is possible that the information supplied by the informants may be incorrect.
7
CHAPTER 6. BIBLIOGRAPHY
https://www.npci.org.in
https://www.researchgate.net
https://inc42.com/features/record-breaking-numbers-upi-2022-hint-india-maturing-digital-payments-
ecosystem/
https://www.livemint.com/Money/A1bTvyBsfMmZeNu6oSfozJ/4-reasons-why-UPI-may-overtake-
mobile-wallets-soon.html
https://www.researchgate.net/publication/320661583_Unified_Payment_Interface-
An_Advancement_in_Payment_Systems
https://www.irjet.net/archives/V4/i11/IRJET-V4I11136.pdf
https://www.thehindubusinessline.com/money-and-banking/npci-initiates-unified-payments-
interface/article64232350.ece
https://www.rbi.org.in
https://ijcrt.org/papers/IJCRT2203299.pdf
https://www.jmra.in/html-article/17247
https://www.ijsr.net/archive/v9i12/SR201202182305.pdf
https://www.businesstoday.in/latest/economy/story/p2m-is-more-than-50-percent-of-upi-volumes-now-
says-npci-chief-dilip-asbe-351949-2022-11-05
https://www.researchgate.net/publication/360599988_A_STUDY_ON_THE_FEASIBILITY_OF_UPI_vs
_MOBILE_WALLETS_AMONG_THE_STUDENTS_OF_FACULTY_OF_SCIENCE_AND_HUMANI
TIES_SRM_INSTITUTE_OF_SCIENCE_AND_TECHNOLOGY_KATTANKULATHUR
7
Why digital payment is a public good (March 2021), Retrieved on May 2, 2021, from
https://www.thehindubusinessline.com/opinion/why-digital-payment-is-a-
publicgood/article34093572.ece
Godambe, A. C. (2020). Unified Payments Interface (UPI) - Advantages and Challenges. International
Research Journal of Engineering and Technology (IRJET), 07(12), 971–973.
https://www.pwc.in/assets/pdfs/consulting/financial-services/fintech/point-of-view/pov-downloads/rbi-
vision-2019-2021.pdf
https://www.ijiras.com/2017/Vol_4-Issue_2/paper_43.pdf
7
CHAPTER 7. QUESTIONNAIRE
Please select the appropriate option to indicate your degree of response.
Q1) NAME :
Q2) AGE GROUP :
Q3) GENDER :
Q4) Who introduced you to UPI?
(a) Friends (b) Family (c) News & Advertisements (d) Social Media
Q5) Are you aware of UPI?
(a) Fully aware (b) Partly aware (c) Heard about it (d) Not at all
Q6) How often do you use UPI?
(a) Always (b) Sometimes (c) Rarely (d) Never
Q7) Which UPI platform do you prefer to use?
(a) Google Pay (b) BHIM (c) PhonePe (d) Paytm
7
Q8) What is your primary reason for using these apps?
(a) Easier access than cash (b) Easier to track transactions
(c) Quick access to bank account (d) Security
Q9) For what services do you use these apps?
(a) Fund transfer (b) Bill payments (c) Shopping (d) Multipurpose
Q10) Why do you prefer paying through these apps?
(a) Convenience (b) Cashback offers
(c) Shortage of currency (d) Better user experience
Q11) Do you believe that UPI transactions are safe?
(a) Yes (b) No (c) Maybe
Q12) Are you able to comfortably able to carry out UPI transactions?
Q13) Do you prefer UPI over cash payments?
7
Q14) On a scale of 1 to 10. How efficient is UPI?
1 2 3 4 5 6 7 8 9 10
Being the lowest Being the highest
Q15) Since how long have you been using UPI?
(a) Past 6 months (b) 6 months to a year
(c) 1-3 years (d) More than 3 years
Q16) Which mode of payment/fund transfer do you prefer the most?
(a) Cash (b) NEFT/RTGS (c) UPI (d) Digital wallets
Q17) Are you aware that UPI transaction limit is Rs. 1 lakh (daily limit)?
Q18) What problems have you come across while operating UPI?
(a) Transfer issue (b) Bank related issue
(c) Server related issue (d) Security issue
Q19) Have you been a victim of fraud while using UPI?
(a) Yes (b) No

8
Q20) What is your biggest concern regarding cashless payments?
(a) Security (b) Merchant acceptance
(c) Poor internet connectivity (d) Technical know-how
Q21) What is your perception towards UPI payments?
(a) Positive (b) Negative (c) Neutral
Q22) Are you satisfied by the service provided by UPI?
Q23) Will you be using UPI in the future as well?

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A PROJECT REPORT

“A FINANCIAL STUDY OF TRANSACTIONS OCCURING VIA UPI ON A

SUBMITTED IN THE PARTIAL COMPLETION OF DEGREE

RAVI KUMAR DURGAPRASAD VISHWAKARMA

ASM'S INSTITUTE OF MANAGEMENT & COMPUTER STUDIES (IMCOST),

I the undersigned RAVI KUMAR DURGAPRASAD

RAVI KUMAR DURGAPRASAD VISHWAKARMA

Name & Signature of the Learner

Name & Signature of the Guiding Teacher

Chapter TABLE OF CONTENTS PAGE

1.1 Introduction to UPI

2.1 Objective of study

4 DATA ANALYSIS, INTERPRETATION AND PRESENTATION 48-67

The key factors driving the development of electronic banking include:

a. Simplified Fund Transfer:

Mr. Dilip Asbe

 Users can link their overdraft accounts to UPI.

 Facilitates instant transactions with all associated OD account benefits.

 Expands UPI's accessibility as an additional digital channel for OD accounts.

 Allows pre-authorization of transactions with a one-time block functionality.

 Ideal for scenarios where money transfer commitment is made in advance.

 Seamless execution for both merchants and individual users.

 Enables customers to review invoices from merchants before making payments.

 Enhances security by verifying the credentials and source of the invoice.

 Streamlines the payment process post-verification.

 Heightens security by verifying the authenticity of merchants via QR codes.

 Provides user notifications to ensure the merchant is a verified UPI merchant.

 Accelerates transactions as an app passcode is unnecessary for signed intent.

1) Pull-based mobile transactions:

2) User interfaces with interoperability:

3) Abstraction of Bank Information:

4) One-Click Two-Factor Authentication for Safety:

5) Mobile first access:

Basis UPI IMPS

Requirements Only a Virtual Payment Address Name of account holder, Bank

Basis UPI Digital Wallet

Intermediary UPI includes direct bank-to-bank A wallet acts as an intermediary

Controlling/Managing This is an NPCI initiative and is Privately owned but regulated by

Some of the key APIs to enable UPI transactions are:

2) Authentication and Address Translation API:

3) Key List API:

 Virtual Payment Address

1) Payment request (Push Payment):

2) Collect Request (Pull Payment):

 Trading Parties to UPI

 UPI Payment Transaction Flow

2) Bank Account Registration

India requires two-factor authentication to be enabled to conduct digital transactions. Two-factor

1) Identity and Account Verification:

3) Transaction Level Security:

UPI Transactional Growth

 Impact on Payments in Physical World:

 Impact on Online Payments:

The salient features of UPI 2.0 are as under:

 Transaction authentication using Biometrics:

 UPI Payment Mandate:

The strengths of UPI platform are as follows:

 Simplified Payment Mechanism:

 Pay & Collect:

 Multiple payment options:

 Notified of Future Payment:

The NPCI’s UPI platform has the following weaknesses:

 Irritation on Double verification: