UPI integration is required for accepting payments directly from customers thought their UPI apps like GooglePay, BHIM UPI, PhonePe etc.
In this article, we have discussed the various types of UPI integrations [with screenshots of payment flow], suitability for your business and how to integrate UPI on your website or mobile application.
Why should you do UPI integration?
UPI has clearly seen spectacular adoption as a P2P payment method, read more here: UPI Growth Trend| Numbers and Analysis. UPI is designed to be a very convenient way to pay for online purchases and B2B payments.
|For customers||Payment information needed for checkout||UPI ID-similar as email and 4-digit MPIN||Bank Login id and password, OTP or PIN||16-19 digit card number, CVV, Card expiry details, Cardholder name, OTP or ATM PIN|
|Mobile friendly design||High – Mobile first design||Low||Low|
|For businesses||Settlement to business account||1 Day||1-2 Days||1 Day|
As compared to other payment modes, UPI checkout flows are reducing the friction for customers and for merchants it means higher transaction success rate and money hitting the bank accounts faster.
Choosing a payment service provider for UPI integration
With all the stakeholders of the payments ecosystem — banks, payment apps and NPCI trying to innovate using UPI, there have emerged many ways to offer UPI as a payment option suited for different kind of payments and platforms.
Banks, UPI payment gateways (like Cashfree) and UPI apps (like PhonePe) all provide integration kits for merchants to start collecting payments on UPI.
- Marginally better scope of price negotiation since aggregators and payment apps add their margin to the bank pricing. However, in practice, pricing is quite similar since aggregators are able to negotiate volume discounts with banks and pass it on to their merchants.
- Banks, being directly connected to NPCI, provide the UPI SDK that converts your app into a UPI app. The primary advantage is that there is no redirection to a third party app. However, It is ideally used only by businesses having only UPI transactions and those who anticipate a very high volume of payments. A good example would be UPI payment apps themselves like Google Pay and PhonePe.
- Setup fee
- Higher turn around time for integration
- Limited integration options
- Success rates dependent on server uptimes of a single bank
- Pending or Failed transfers need manual reconciliation
- Dashboard, Reporting and MIS is less
- Operational Support and troubleshooting is slow
UPI payment gateways
(*Offered by Cashfree exclusively)
- Simple and quick integration
- No setup fees
- Multiple integration options for web and mobile*
- Higher success rates due to routing between multiple banks*
- Automatic reconciliation of pending and failed transactions*
- Better operational support
- Quick troubleshooting over email and chat
- Detailed MIS, reporting and user-friendly dashboard
- Common merchant UPI ID shared between multiple merchants. However Cashfree merchants can apply for unique, white-labeled UPI IDs which get registered at the banks.*
How Cashfree offers higher than industry average success rates on UPI?
Cashfree has direct UPI integrations with multiple banks & PSP apps such as Google Pay. Our in-house transaction routing algorithms and automated reconciliation process for pending payments ensure a higher success rate than the industry standard.
UPI apps like Phonepe
Occasional offers and cashback (can be offered via aggregators as well)
- Cumbersome integration which can be added via an aggregator as well
- Additional step at checkout if login is needed
- Only UPI supported, hence payment operations get split across multiple service providers
While banks and aggregators both offer UPI as an option, it is better to opt for an aggregator if you want to accept online payments through UPI as well as other payment modes.
UPI still accounts for a minor share of transactions in terms of value as compared to cards, and it is easier to integrate and operate multiple payment modes via the same payment provider such as Cashfree.
How to integrate UPI as a payment option into my product or website
For UPI integration you can reach out to any of the payment providers listed above. But before you finalize you also need to understand what are the different types of UPI integrations and corresponding checkout flow.
Types of UPI Payment gateway integrations
1) Webflow UPI integration
Platform: Web, mobile web, Android, iOS
This is the most popular UPI integration mode. Let’s see how it works from a customer perspective.
Let’s take an example of customer checkout experience on Mogra Designs, a Cashfree merchant having UPI Webflow integration.
- Customer selects items, fills details like shipping address, delivery instructions etc
- Selects UPI as payment mode, enters his mobile app UPI ID, also called as VPA (Virtual Payment Address), verifies and submits it.
- Need to check his mobile phone and do a two-way authentication which involves:
a)Opening the UPI app (in this case BHIM app) using app Passcode or thumb impression as the case may be.
b)Authenticating the transfer by entering UPI PIN. (UPI-PIN is a 4-6 digit secret code you create/set when you link a bank account with your UPI mobile app.)
Once the payment has been authenticated by the customer, the transaction will be marked as successful.
The customer has to first enter his VPA(or UPI ID), open his UPI mobile app, do 2-factor authentication on his mobile phone and then come back to the website.
Any business that wants to provide UPI as a payment mode and doesn’t mind redirecting the customer to a third party site (UPI app provider such as Google Pay, PhonePe). It is a relatively economical UPI integration mode.
2) UPI Google Pay integration
Platform: Web, mobile web, Android, iOS (Payer needs to have Google Pay on their phone)
This is similar to the UPI web flow. Hence the payer needs to enter his phone number instead of the UPI ID.
UPI Google Pay integration is a very convenient checkout flow as the payer/customer need not remember the UPI ID/VPA. Cashfree provides UPI Google Pay integration.
Customer enters a mobile number instead of UPI VPA/UPI ID, do a 2-factor authentication (as explained before) and completes the payment.
Any small and medium business that wants to provide UPI payment option. This mode should be used when you see that Google Pay is a preferred UPI payment mode among customers.
3) Intent flow UPI integration
As soon as the user chooses the UPI payment app, the app installed in his mobile launches automatically, the user doesn’t need to enter UPI VPA or phone number as it is auto-filled along with other payment details including the amount to be paid.
Intent flow is a frictionless checkout experience as it automatically launches a preferred UPI mobile app during payment. It is ideal when your customers are placing an order directly on an Android app. Intent flow is offered as a part of Cashfree’s Android SDK.
4) UPI SDK flow integration
Platform: Android, iOS
Using the UPI SDK, the merchant can receive the payment without the customer having to open any third party app. This form of integration works only on mobiles(Android & iPhone) and is provided by banks like RBL, ICICI, Yes Bank, and Axis Bank. For this, you need to contact the bank directly and request for NPCI UPI Android SDK to receive payments.
- In this case, the bank will create a VPA and then you can get paid by customers on the same VPA on your mobile app. Once you have the access to UPI SDK, you need to add it to your website/mobile application to enable transactions using UPI.
- Here no separate UPI app such as BHIM, Google Pay etc is required. Since there is no redirection to any third party application, using UPI SDK integration, the conversion rate increases.
Typically big businesses having a high volume of daily inward transactions on its mobile app opt for this type of integration.
5) Payment by QR code on UPI app
Platform: Offline, Web
what is a QR Code?
QR code or Quick Response Code is a unique graphics code. Different ways to use UPI QR Codes are:
A) Dynamic Universal QR Codes:
- A unique QR code is created for each order during checkout.
- The customer can simply open any UPI mobile app, scan the dynamic QR code created for the order and pay.
- This QR code works across all UPI apps.
This is similar to the UPI webflow. However, the customer does not need to enter their UPI ID and can choose to scan a QR Code.
This feature is provided by Cashfree. On scanning, a payment request gets initiated to the customer’s UPI app which needs to be approved. Once the customer pays, Cashfree will automatically complete the transaction and mark it as paid.
Any business willing to provide seamless UPI payment flow. In this, since a dynamic QR code is generated for each transaction, tagging the payment as successful for a transaction is automated.
B) Static QR Codes:
- The payee merchant, instead of (or in addition to) sharing their UPI ID as text, converts it to a QR Code which is easy to scan and pay.
- The merchant can directly use app-specific QR codes (for eg. Paytm as shown above)
- Interoperable QR codes by UPI apps can also be used ( for example if you use BHIM UPI QR code, the same works for accepting payments from Google Pay, Phone Pe and Bhim app)
Used when the merchant wants to receive payments offline.
6) AutoCollect and reconcile UPI collections through virtual UPI IDs
The above mentioned UPI payment flows involve the payer visiting the payee merchant’s app or website to initiate a transaction.
However, for many regular, day-to-day payments, the payer may not visit the payee merchant’s app. It is also possible the payee merchant may not a have a website or app with a UPI payment option. Examples can be phone bill payments, school fee payments, short-term loan repayments, apartment fee maintenance etc.
While the payee merchant can simply share their UPI Id with the payer to collect payments, it becomes difficult to reconcile received payments for the payer by looking at the bank statement.
Let’s take Airtel bill payments as an example — If 1 million people were to pay bills by sending money to airtel@icicibank, Airtel would probably take a very long time to mark those bills as paid.
- The payee merchant creates a unique virtual UPI Id for each payer. For example, airtel.[Phone No]@icicibank.
- Since a payer pays into a unique UPI ID instead of everyone sending to airtel@icicbank — the bill payment is reconciled the moment the money is received.
- Better still, UPI being a platform that is available across all payment apps today, it is possible to make such payments from any app like Google Pay, BHIM, Paytm and even WhatsApp. The payer just needs to know the correct UPI ID to send money which is shared by the merchant.
- AutoCollect by creating virtual UPI IDs is a great solution for the offline UPI payment use case such as phone bill payments, school fee payments, short-term loan repayments, apartment fee maintenance etc.
UPI is considered an incredibly well-designed and mobile-first payment solution. Integrating UPI into your website/application offers a faster and more preferred way to pay for an increasing number of customers.
Depending on the kind of checkout experience that suits your business use case, you can opt for the appropriate mode of UPI integration. If you have questions or want to talk to our payments experts, please write us at email@example.com.