India steps into a new mobile payments revolution with IMPS version 2.0

upi-imps21 banks in India, including Andhra Bank, Axis Bank and Bank of Maharashtra, are introducing the upgraded form of India’s pioneering immediate payment service (IMPS) starting today.

Under the new form of IMPS, users will be able to send money using proxy addresses instead of full bank account details, thus making instant money transfer across banks super easy.

At present, to send money from one bank account to someone who has an account in another bank, you need to know that person’s account details. Even a small mistake in typing in the account details could result in the money going to someone else.

Under the new system — which is being termed as UPI or the more advanced version of IMPS — users can create so-called ‘virtual address’ which can even be their mobile number.

Another advantage is that the person making the payment doesn’t have to do all the typing. The new system allows the receiver to type in the virtual ID of the payer and the amount he needs. All that the payer has to do is click on ‘yes’ on his mobile app.

The new system is being called Unified Payments Interface, and has been created by the National Payments Corporation of India. Outgoing RBI governor Raghuram Rajan was one of the project’s biggest backers and driving spirits.

“Unified Payments Interface will allow a customer to have multiple virtual addresses for multiple accounts in various banks. In order to ensure privacy of customer’s data, there is no account number mapper anywhere other than the customer’s own bank.

“This allows the customer to freely share the financial address with others. A customer can also decide to use the mobile number as the name instead of the short name for the virtual address like 1234567890@xyz,” NPCI said.

India is one of the few countries which has a government-created IT system that allows any bank account holder to instantly transfer money to bank accounts in any other bank. The system, called IMPS, is available even during holidays.

However, using the system for making payments at shops and for taxis was more difficult as you had to enter the bank account details of the merchant prior to making the payment. However, under the new system, the recipient does not need to share his bank account details, but only an easy to remember virtual address like a mobile number.

The mobile number, or the virtual address, is linked to a single bank account, where the money lands.

At present, it is possible to transfer money using mobile numbers, but only if both parties use the same ‘wallet service’ like Airtel Money or PayTM. Besides, the receiver has to then manually transfer the funds from his wallet to his bank account.

In other words, both the auto-driver and you must be using the same wallet service (PayTM, Airtel Money etc.) for the earlier system to work, while the new system does not require you to sign up for any such wallet service.

The system has been in testing for sometime.

“On April 11, 2016, the soft-launch of UPI was announced by Dr. Raghuram Rajan. For the last few months it was under pilot run mainly with employee-customers. The purpose of ‘pilot run’ was to ensure that technical glitches, if any, are fixed and the product gives a smooth experience for immediate ‘Pay’ and ‘Collect’.. After assessing the success of pilot run, RBI had accorded their final approval for public launch of the product,” said NPCI.

“This is a success of enormous significance,” said A. P. Hota, MD & CEO, NPCI.

“Real-time sending and receiving money through a mobile application at such a scale on interoperable basis had not been attempted anywhere else in the world. Now the UPI App will be made available on Google Play Store by banks.”

However, not all banks have been allowed to offer the service.

Only the banks with 1000 pilot customers, 5000 transactions and success rate of around 80 percent would be permitted to go live.

“Such a threshold criteria helped banks to refine their systems and procedure. The UPI app of 19 banks will be available on the Google Play Store in next two to three working days for the customers to download and start using. The relevant details of the service would be available on the website of 21 banks,” the payments corporation said.

Besides the three above listed banks, the following have also been selected for the UPI service: ICICI Bank, Karnataka Bank, Union Bank of India, United Bank of India, Punjab National Bank, Oriental Bank of Commerce, Canara Bank, UCO Bank, Bhartiya Mahila Bank and Vijaya Bank.

Some private banks, such as Catholic Syrian Bank, DCB Bank, Federal Bank, TJSB Sahakari Bank, South Indian Bank and YES Bank have also qualified.

Interestingly, the country’s biggest bank, State Bank of India, does not figure in the list.

IDBI Bank and RBL Bank are on-boarded as issuers, which means that their customers can download any UPI enabled Apps (from other banks) mentioned above and link their account.

The key strength of UPI will be its support for ‘virtual payment address’ as a payment identifier. It will work on single click 2 factor authentication.


It also provides an option for scheduling push and pull transactions for various purposes like sharing bills among peers. One can use UPI app instead of paying cash on delivery on receipt of product from online shopping websites and can pay for miscellaneous expenses like paying utility bills, over the counter payments, barcode (scan and pay) based payments, donations, school fees and other such unique and innovative use cases.

National Payments Corporation of India (NPCI) was set up in 2009 as the central infrastructure for various retail payment systems in India and was envisaged by the Reserve Bank of India as the payment utility for all banks in the country.

During the last six years, the organisation has grown multi-fold from 2 million transactions a day to 25 million transactions now. From a single service of switching of inter-bank ATM transactions, the range of services has grown to Cheque Clearing, Immediate Payments Service money transfer (24×7), Automated Clearing House, Electronic Benefit Transfer and a domestic card payment network named ‘RuPay’ to provide an alternative to international card schemes. Currently, there are over 290 Million RuPay Cards in circulation.