Understanding the Difference Between UPI and Other Payment Methods
5 min read
Remember back in the day when people traded goods directly like, “I’ll give you a basket of apples for that basket of bread”? It worked, but there were two big problems:
What if the other person didn’t want what you were offering?
How could you know if the trade was fair, value-wise?
That’s when coins came in. They gave everyone a common standard for value, making transactions much easier and fairer. No more hunting for the right person to trade with!
Fast forward to today: payments have evolved. We moved from physical money and credit cards to digital payments, making everything faster and more efficient.
Now, in India, there’s something even more advanced: Unified Payments Interface. UPI has made it possible for businesses of all sizes to accept cashless payments easily. Whether you’re a small shop or a large business, UPI offers a seamless way to handle transactions. It’s faster, safer, and cheaper than traditional methods.
In this article, we’ll look at the benefits of UPI and how it’s different from other payment options businesses might be using. It’s time to explore how UPI can help streamline your business and improve your payment process.
What is UPI?
Think of UPI as a more convenient and efficient way to make digital payments!
Launched in 2016 by the National Payments Corporation of India (NPCI), UPI makes sending and receiving money easier than ever. Just a quick scan or a few clicks and you’re good to go. In fact, in December 2024 alone, there were 16,730 million UPI transactions!
For businesses, UPI has made accepting payments super easy. Whether your customers are paying online or in-person, they can just grab their phones, scan the QR code, enter the phone number or enter the UPI ID, and that’s it – the payment is done! And with two-factor authentication, it adds that extra layer of security, making sure everything stays safe and sound from financial fraud.
When a customer uses a business’s UPI ID or QR code to make a payment, the UPI system processes the transaction and the money gets deducted from the customer’s bank account. The amount is then credited to the business’s account shortly after, depending on the settlement period. Both the customer and the business receive notifications confirming the successful transaction once it is processed.
While UPI is the most popular and convenient method, businesses can also accept payments from customers using other methods, like credit/debit cards, mobile wallets, internet and mobile banking, etc. Let’s look at these methods in detail.
If you’re running an online business, you’ve got plenty of ways to receive payments aside from just UPI. From good ol’ debit and credit cards to banking apps and even cryptocurrency, these options bring extra convenience and flexibility to the table. Let’s take a closer look at some of these choices:
1. Credit/Debit Cards
Credit and debit cards are some of the most popular payment methods for online transactions. They are secure, super convenient, and easily accepted across the world. However, businesses need a Point-of-Sale (POS) terminal for in-person card payments and a payment gateway for online transactions. For example, an online electronics store can offer card payment options to customers, so they can make purchases quickly. Similarly, a physical electronic store could offer a POS terminal that’ll let customers pay through a simple tap or swipe.
2. Mobile Wallets
Mobile wallets are a key part of payment gateways, enabling businesses to accept fast, hassle-free payments. They require no MPIN input, leading to near-zero payment failures and a seamless checkout experience. Setting them up is simple, making them ideal for small online businesses. For example, an online clothing store can integrate a mobile wallet option, allowing customers to pay instantly without entering card details each time. This speeds up transactions, enhances security, and helps businesses close sales more efficiently.
3. Net Banking
Businesses can also receive payments from customers through direct bank transfers via NEFT, RTGS, or IMPS. These methods are best suited for larger transactions but may take some time to settle. For example, an e-commerce site can accept payments through net banking, allowing customers to pay directly from their bank accounts without needing a card or digital wallet.
4. Cash on Delivery (COD)
If you run an online business, you can allow customers to pay after product delivery, helping build trust. However, this may lead to higher return rates and payment delays. For example, a local delivery service can offer a Dynamic QR option at the time of delivery, ensuring customers pay only after receiving their order, providing them with peace of mind.
When you compare UPI to other payment methods, it’s easy to see why it’s a great choice for your business. UPI offers multiple benefits that simplify payments. While UPI transactions are free for customers, businesses may incur charges depending on their payment service provider.
It also gives you different ways to accept payments, like QR codes, UPI IDs, mobile numbers, and payment gateways. This means you can cater to different customers, whether they are shopping online or in-store. UPI also lets you track your payments in real-time so you can keep an eye on every transaction.
UPI is a great way to improve customer satisfaction too. It gives them a fast, cashless way to pay, which is becoming extremely popular these days. You can also add UPI to your website or app, making it a lot more convenient for customers.
And that’s not all. UPI helps you reach a wider customer base, supporting financial inclusion. Plus, if you offer subscription services, you can also set up recurring payments through UPI. With so many incredible benefits, UPI is perfect to grow your business and improve customer experience.
UPI has brought a new level of convenience, security, and affordability to business transactions. Its 24/7 availability, flexibility, and quick transaction speeds make it essential for any modern business. PhonePe’s user-friendly payment gateway takes this convenience even further.
With millions of users already relying on PhonePe for their UPI transactions, integrating it into your business can offer numerous advantages. Built on the same reliable tech infrastructure as the PhonePe app, the gateway ensures seamless integration, high success rates, and top-tier security while fully complying with regulatory standards.
Give your business a boost with the PhonePe UPI payment gateway. Integrate it today for a fast, secure, and smooth payment experience for your customers.
