https://medium.com/@srkasthuri/understanding-upi-h...
Created on: July 13, 2025
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The Medium post (18 Dec 2024) gives a primer on India’s Unified Payments Interface (UPI)—its architecture, how a payment actually travels from your phone to another bank account, and the security controls that keep the rail safe. Below is a distilled walkthrough plus up-to-date safety advice.
1. What UPI is and why it matters
- Real-time, bank-to-bank rail built and run by the National Payments Corporation of India (NPCI).
- Recent scale-up: 15,547 crore transactions worth ₹223 lakh crore in Jan-Nov 2024 alone Medium.
- Removes the need for IFSC codes or account numbers—everything revolves around a Virtual Payment Address (VPA) like
name@bankor a QR code.
2. Core building blocks (per the article)
| Component | Role | Key point |
|---|---|---|
| VPA | User-friendly alias to an account | No exposure of bank details Medium |
| UPI-PIN | 4–6-digit second-factor | Locally stored; never shared with NPCI/PSPs Medium |
| PSP/App | Front-end (PhonePe, Google Pay, Paytm, BHIM) | Collects input, talks to NPCI switch turn6view0L27-L31 |
| NPCI switch | Orchestrator | Validates and routes every request Razorpay |
| Issuer & Acquirer banks | Sender’s / Receiver’s banks | Debit & credit accounts, confirm back Razorpay |
3. How a payment really flows
- Registration – Link bank, create VPA & UPI-PIN (device binding ties app to SIM/phone) turn6view0L8-L10.
- Push transaction (pay)
- Enter VPA / scan QR & amount.
- Enter UPI-PIN → App → PSP → NPCI → Issuer bank.
- Issuer debits, NPCI settles, acquirer credits, confirmation pops in < 5 s turn6view0L16-L20.
- Pull transaction (collect request) – Merchant or peer sends a request you must approve with your PIN, giving you control Razorpay.
4. Security controls baked into the rail
| Layer | Control | Why it helps |
|---|---|---|
| 2-Factor Auth | SIM/device binding + UPI-PIN (and often biometrics) | Stops credential replay if phone number or PIN alone is stolen turn6view0L33-L34 |
| End-to-end TLS / AES-encrypted payloads | Data confidentiality over the wire | Mitigates MITM sniffing The Times of India |
| Device binding | Transaction allowed only from registered phone | Blocks log-in from cloned apps/devices |
| Hard transaction limits | ₹1 lakh/tx & daily caps (bank-configurable) | Limits loss even if account breached view0L62-L63 |
| Regulatory oversight (RBI) | Dispute-resolution & mandatory 2FA | Industry-wide baseline security view0L62-L63 |
5. Threats a pentester watches for (article’s angle)
| Vector | How it works | Mitigation tip |
|---|---|---|
| Phishing / social-engineering “collect” scams | Attacker sends payment request disguised as refund or prize | Verify requester name; never approve unknown collect requests |
| Screen-overlay malware | Fake app layer harvests PIN/OTP | Install only from official stores; deny “Appear on top” to unknown apps |
| Remote-access trojans (RATs) | Trick user to sideload APK + accessibility permissions | Keep Play Protect on; avoid sideloading |
| SIM swap & call-forwarding | Hijack SMS OTP for PIN reset | Enable carrier PIN lock; watch for sudden loss of signal |
6. Five NPCI-endorsed user practices (July 2025)
- Double-check payee name before hitting “Pay”.
- Use only trusted apps / official app stores.
- Never share UPI-PIN or OTP—not even with “bank” callers.
- Don’t act under urgency; scammers press for speed.
- Keep SMS/email/app alerts ON and review them quickly.
7. Take-aways for everyday users
- UPI’s design is inherently secure—but only if you keep the human layer (you!) secure.
- Treat the UPI-PIN like an ATM PIN; nobody legitimate will ever ask for it.
- Stick to the golden rule: “Approve, don’t share.”
- For larger or business-critical transfers, you can break a payment into multiple smaller ones to stay within per-transaction caps and further reduce risk.
Feel free to ask if you’d like a deeper dive—e.g., architectural diagrams, latest RBI circulars, or how UPI compares with FedNow & PIX.