Short Guide on Understanding UPI Payments
I got curious after seeing a payment failure from Google Pay at a restaurant. I am not alone in cursing Google Pay without any understanding, for their bad UX of UPI Transactions. But, they are not the entire defaulter, and you can see a better performance by just managing your UPI IDs and adding a few more.
I read multiple whitepapers to understand the architecture of one of the most robust digital payment interfaces globally, the Unified Payment Interface (UPI), and how Indian apps like GPay, Phonepe, etc. use them.
DISCLAIMER: This is not a technical architecture explainer article, and just an overview if someone is curious and wants to know in brief.
So, if you are one of the initial users of Google Pay having a UPI ID ending with @oksbi, add a new UPI ID, for god’s sake.
To understand the different steps involved in the process of making a UPI Payment:
We can consider the following actors involved:
- Payer
- PISP: Payment Initiation Service Provider
- AISP: Account Information Service Provider
We can consider the following actions to take place:
- A UPI App initiates a transaction.
- The UPI app chooses the PISP.
- The AISP/Issuer Bank verifies the transactions to be valid regarding balance and account details and generates a digital signature.
- If the request is valid, the PISP routes it to NPCI, where it is verified.
- NPCI deducts the amount from the payer if it is valid, and the receiver account gets the fund.
Conclusion:
- Try to keep multiple UPI IDs for your bank account.
- Different apps have partnerships with different PISPs. e.g. Google Pay was heavily dependent on SBI only initially; now, it has added other PISPs. Paytm provides support of Paytm Bank as PISP, making it faster.
- For the fast-fail checks, different apps are using different ways, like Machine Learning and network loads on different PISPs, and that’s the actual competition to stand out.
Thanks for reading :)
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