Using UPI for Business: How It Compares With RTGS and IMPS

The global market for digital payments is predicted to increase at a compound annual growth rate (CAGR) of 11.2%. The advent of digital payments has revolutionised the way transactions are carried out, making it easier than ever to send and receive money. As your organisation grows, digital payment solutions allow you to handle bigger transaction volumes without compromising efficiency or security. You can easily enter new markets, add more payment options, and handle rising client demand.

Understanding UPI for Business

UPI is a payment system developed by the National Payments Corporation of India (NPCI). It enables businesses to transfer funds instantly using their smartphones. Unlike traditional methods like cheques or manual bank transfers, UPI offers a seamless and secure way to make payments.

Setting Up Your UPI Business Account

To get started with UPI, you need to set up a dedicated UPI ID linked to your business bank account. This unique identifier allows customers and clients to make payments directly to your account without the need for additional details such as bank account numbers or IFSC codes, enhancing security and privacy.

Creating a UPI ID is a simple process:

• Choose a UPI-enabled app: There are several popular apps available. Select one based on your preferences and install it on your smartphone.
• Link your bank account: Follow the instructions provided by the app to link your business bank account with the UPI app.
• Set up a UPI ID: Create a unique identifier for your business. It could be something as simple as your business name or a combination of your name and business type.

Once you have set up your UPI ID, you are ready to start accepting payments through UPI.

Accepting Payments Through UPI

UPI offers a range of options for customers to make payments to your business. By offering multiple payment options, you can cater to the preferences of various customers and ensure a seamless payment experience:

• QR code: Generate a dynamic QR code that customers can scan using their UPI-enabled app to initiate the payment. This method is particularly useful for in-store transactions, allowing customers to make contactless payments conveniently.
• UPI ID: Provide your UPI ID to customers, who can then enter it manually in their UPI app to make the payment. This method is suitable for remote transactions where physical proximity is not possible.
• Payment links: Generate payment links and share them with customers through email, messaging apps, or social media. Customers can click on the link and complete the payment using their preferred UPI app.

Comparing UPI With RTGS and IMPS

1. UPI vs. RTGS

While UPI allows you to instantly transfer money between different bank accounts using your smartphone, Real-Time Gross Settlement (RTGS) is a payment system that enables large-value fund transfers on a real-time basis. It is primarily used for high-value transactions for transactions above ₹2 lakhs, where the money needs to be transferred instantly and without any delay. 

RTGS is an online, bank-based platform ensuring immediate credit to recipients' accounts during banking hours on working days. While RTGS is suitable for large transactions, UPI is more convenient for everyday and smaller payments.

2. UPI vs. IMPS

Immediate Payment Service (IMPS) is an instant interbank electronic funds transfer service available 24/7, including holidays. It allows you to transfer money using your mobile number and Mobile Money Identifier (MMID) or through internet banking.

Unlike UPI, IMPS requires the use of bank account details such as account number and IFSC code. UPI eliminates the need for sharing sensitive bank account information by using a UPI ID as a unique identifier. This not only enhances security but also makes it easier to receive payments from customers or vendors who may not be familiar with your bank details.

Benefits of UPI for Business

Now that we understand the differences between UPI, RTGS, and IMPS, let's explore why UPI for business is gaining popularity:

1. Speed

UPI enables instant transfers, ensuring that businesses can receive payments quickly and efficiently. This is particularly beneficial for small businesses that rely on timely cash flows.

2. Convenience

With UPI, businesses can provide their customers with multiple payment options and customers can choose the method that suits them best.

3. Cost-effective

UPI transactions are typically lower in cost compared to other payment methods like RTGS. This makes it an attractive option for businesses looking to reduce transaction costs.

4. Security

UPI uses two-factor authentication, ensuring secure transactions. Additionally, with features like biometric authentication, businesses can provide an extra layer of security to their customers.

5. Scalability

As UPI continues to grow in popularity, more and more financial institutions are integrating UPI into their platforms. This makes it easier for businesses to scale their operations and reach a wider customer base.

6. Enhanced Customer Experience

By offering UPI as a payment option, you provide customers with a convenient and secure way to transact. This improves customer satisfaction and encourages repeat business.

7. Simplified Reconciliation

With each transaction recorded digitally, reconciling payments becomes effortless. You can easily track incoming and outgoing funds, simplifying your financial reporting and reducing the chances of errors.

8. Tax Compliance

UPI transactions facilitates the simplification of tax compliance paperwork. Viewing your transaction history and creating reports is simple. The burden of tax compliance is lessened as a result.