UPI transactional flows

Tanisha Sabherwal
Tanisha Sabherwal
August 23, 2021

There are essentially two of payment flows in UPI:

  1. Push flow: Payer initiates the transaction to the payee
  2. Pull flow: Payee requests the transaction from the payer

Transactional flow models

Based on the number of entities involved in the process, there are different models of UPI transactions that take place.

  1. Two Party Model: Payer PSP and remitter bank are the same entities and so is the Payee PSP and beneficiary bank.
  2. Three Party Model: Two possible cases:
    • Payer PSP and remitter bank are the same entities and the Payee PSP and beneficiary bank are different.
    • Payer PSP and remitter bank are different entities and the Payee PSP and beneficiary bank are the same.
  3. Four Party Model: Payer PSP and remitter bank are different entities and the Payee PSP and beneficiary bank are also different.

The flow

The below illustration covers the four party model to encompass all other models.

Four Party Model Push Flow

Four Party Model Push Flow

Four Party Model Pull Flow

Four Party Model Pull Flow

Merchant UPI Transactions

Current and Nodal accounts do not have debit cards hence creating a VPA is an issue. In this case, the acquiring bank creates a VPA for the merchant by integrating with them or a payemnt aggregator.

Collect Flow

This flow is usually the one where you enter the VPA on the merchant's website and receives a notification on the TPAP to proceed with the transaction.

It has certain hiccups:

  1. Manual entry of VPA by the user.
  2. Lack of visibility since the user has to open another app and merchant does not know if the user got the notification from TPAP.

Intent Flow

The merchant lists down the TPAP apps installed on the device and on selecting switches to the app to complete the transactions. Initially it was only for android, now companies like Razorpay have come up with iOS intent flow as well.

It works really well as it has seamless app to app switch with no need to enter the VPA or scan the code, hence better success rate.

Whatsapp just launched WhatsApp UPI and Whatsapp's UPI transactions suddenly doubled from the 5-month stagnant volume of 500k transactions per month to 1Million+ in a month during September. The power of UPI is indeed amazing!

WhatsApp Pay Icon

WhatsApp Pay Icon

Resources: Dice India, Learn Payments, AuthNCapture