From QR codes to fraud risks: 7 essential UPI facts every user should know

1. What is UPI?

UPI (Unified Payments Interface) is an instant payment system that allows you to transfer money between any two bank accounts using a mobile app. It acts as a digital bridge between banks, making money transfers simple.

2. How does it work?

• Link your mobile number to your bank account.
• Create a UPI ID (example: name@ bank). This acts as a virtual unique address, so the system knows exactly where to send or pull money from.
• Set a UPI Personal Identification Number (PIN) which acts as a digital signature while doing a transaction.

3. Features of UPI

Bank details not required: You need only UPI ID or your phone number for transactions.
No more worrying about change: You pay the exact amount by scanning the QR code.

No more ‘I’ll pay you later’: The money moves from your bank/wallet to theirs immediately, any time.
Digital record: Transaction history is available to track your spends.

4. How teens can use UPI

Under updated Reserve
Bank of India (RBI) guidelines, the digital payments ecosystem has recently been opened to minors and teenagers. Here’s how you can do it:

• UPI Circle: Parents can add you as a ‘secondary user’ on their account and you can scan and pay.
• Teen-specific wallets: Apps like Junio and FamApp allow minors (11+ years) to use UPI through a digital wallet; no need for a personal bank account.
• If you are 10+, you’re eligible for independent UPI access.

Note:RBI Update
India’s UPI ecosystem now lets minors pay digitally.

5. Beware of the risks

• PIN is for sending only: You don’t need to enter your UPI PIN to receive money.
• No random QR codes: Don’t scan codes sent by strangers online as they could be fraud traps.
• Check the name: Always verify the recipient’s name on the screen before hitting “Pay”.

6. Money challenge

You may give every UPI payment (on apps like BHIM, Google Pay,or Paytm) a score:
+2 ¦ Smart spend (important need)
+1¦ Okay spend (a planned want)
–1¦ Impulse spend (unplanned want)
–2¦ Regret spend (‘Why did I even buy this?’)
At the end of the week, check your level:
Level 3 (Pro): Strong positive score—you’re in control;
Level 2 (Balanced): Around zero, could go either way;
Level 1 (risk zone): Negative score, spending needs a reset

7. Money fact

UPI works in real time. You enter your PIN, and the money is gone instantly—no delay, no undo. That’s why every payment deserves a quick double-check.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava & Labdhi Mehta.