UPI, explained: what happens in the seconds after you tap Pay

The Unified Payments Interface, or UPI, was launched in 2016 by the National Payments Corporation of India (NPCI), the organisation that also runs RuPay and IMPS. It lets any participating bank account be reached through a simple address such as name@bank.

The moving parts

Your UPI app — whether from a bank or a payments company — talks to your bank through NPCI’s central switch. Your UPI ID hides your account number. Your UPI PIN, which only you know, is what authorises money to leave your account.

What happens when you pay

When you scan a QR code and enter your PIN, the app sends an encrypted request to your bank through NPCI. Your bank checks the PIN and the balance, debits your account and informs NPCI, which asks the receiver’s bank to credit the money. Both sides get a confirmation, usually within seconds, with a unique transaction reference number (UTR).

The one rule to remember

You never need to enter your UPI PIN to receive money. The PIN is only for sending. If a buyer, caller or “customer-care agent” asks you to enter your PIN to receive a refund or a prize, it is a fraud — decline the request.

Collect requests and QR codes

Anyone can send you a “collect” request asking for money; nothing happens unless you approve it with your PIN. In the same way, scanning a QR code is for paying, never for receiving.

If a payment fails

If money leaves your account but the payment fails, it is normally reversed automatically. RBI rules set time limits for such reversals and require banks to compensate customers when they miss them. Keep the UTR number and raise a complaint in your UPI app if the refund does not arrive.