During a transaction - I just need to mention my bank account and after that my MPIN?
Yes. The second factor in UPI will be an MPIN to start with, but it can also use AADHAR based biometric verification.
How can I leverage UPI to add recurring billing as a component in our product?
You can't as of now. This is however in the UPI vision document, and will hopefully be part of the next version release.
And if we have to enable in store payment facility for our users then how can we do it with UPI? Is there any hardware device we can make use of to process the payment?
Authorization in UPI always takes place in the customer's smartphone. As a result, you can initiate a collect request by asking the customer's identifier (Mobile, Aadhar, Bank Account etc) and the customer can authorize the payment by confirming the notification they receive on the phone.
What about 2FA in this case?
UPI is fully compliant with RBI's 2-Factor guidelines.
Why UPI? What is the ideal target transaction-demographic where we expect UPI to become the method of choice? For instance will it replace low-value cheque payments (B2B)? Or P2P payments?
UPI won't replace cash entirely, for one. P2P payments will become far more easier. Low value transactions initiated by merchants can be easily handled via collect requests in UPI. However, IMPS is still somewhat costly for large value transactions compared to RTGS/NEFT, and it might not have an effect there. Finally, online payments will be the most impacted market.
What will be the cost of using UPI for users? Will it be cheaper than IMPS?
It will be probably be the same as an IMPS transfer. The IMPS charges vary across banks, and this is something that NPCI might look into in the future. NPCI has not released its operational guidelines on UPI yet, and we will know for sure once they are released.
If I can add a PNB account in HDFC app, how will UPI verify that the person adding the account is really the owner of the account
It will ask you to initiate a small amount transfer (<1 INR) from your PNB account using UPI itself to confirm that you have ownership of the account.
Is Account Number visible to the payee?
Depends on the Bank. Since it is an IMPS transfer, the bank is aware of the source of the money transfer. But it can decide not to show it to the Payee in this case.
Who settles the merchant payments at the end of the day
There is no settlement happening under UPI, since it is a direct transfer from the customer's account to the merchant account.
Which means nodal account needs to be present , If at all an MDR has to be collected per transactions from merchants. Which spoils the UX of instant credit like how it is in current scenario for IMPS.
UPI does not cater to the entire market and the needs of every merchant. For cases where you need Nodal Accounts (such as marketplaces), you can use UPI to get money into your Nodal Account and handle remittance at your end.
How does NPCI plan to ensure the entry of MPIN is not compromised
NPCI will provide a secure SDK for all 3 supported platforms (Android, Windows Phone, iOS) which will ensure that data is not tampered or compromised in transmission to UPI.
How does UPI stop me from adding my friend's account on my bank's app?
You need to initiate a successful small amount transfer from the account to prove ownership. You can't do that unless your friend gives you the MPIN for their account.
Will there be any device integrated with UPI which can be used by the merchants to accept in-store payments? A hardware device like a MSR?
UPI is betting on smartphone penetration in India. Third-parties can come up with dedicated hardware to initiate collect requests, but collect don't handle "security-critical data" (such as card numbers), you can easily initiate them with smartphones. As such, you'll see mobile applications, not hardware for supporting UPI.
Can UPI be as an intermediary merchant acc? Payer pays the UPI. then UPI settles the amount to Payee? Is this possible?
No. UPI does not run on an escrow model, which is obvious once you realize it runs on top of IMPS. As such, money is transferred from customer to the merchant directly.
So, the way that UPI is better than IMPS is because it is interoperable within banks?
Yes, partially. It also brings collect requests, which can be a game changer for online payments in India.
Currently for IMPS, you need to know receiver's MMID+ Phone number, whereas in UPI, is just phone number (or any unique identifier) enough?
Yes. UPI can act as a translation layer for different kind of addresses such as mobile or Aadhar Numbers.
What will be incentive for small merchants and small service providers to use UPI if there is a cost involved, why will those who currently prefer cash economy?
The same reason that merchants accept Card Payments over PoS devices: convenience. Cash on Delivery is another huge issue in India, and UPI can help us in solving the problem.
What will happen if a Person has 2 Account which are linked to 1 mobile no how will the UPI resolve the Account no.?
Since UPI authentication requires access to Mobile Banking via the NPCI run NUUP
service (*99#), customers can use the USSD service to decide the defaults.