25th September 2021
Let's quickly reiterate the payment flows of UPI we discussed in Day 11: UPI, entities involved.
Based on who initiates the transfer:
- Push: Payer initiates the transfer to payee
- Pull: Payee requests the payer to transfer
Based on the no. of parties involved excluding NPCI, there are few models: Two party model, Three party model, Four party model.
Push Payment flow; Four party model
Consider a P2P or peer to peer transaction of amount ₹100 from Mona to Krishna. Mona uses Paytm for most of her UPI payments and has a savings account in HDFC, while Krishna uses GPay and has a bank account in SBI. These are fictional examples just to understand the flow.
Four party model entities
Following are the steps involved in the above UPI Push transfer:
- Payer (Mona) initiates the transaction by entering Payee (Krishna's) VPA, amount and the UPI Pin on the UPI payment app (Paytm)
- Payer PSP (Paytm) receives the request and transfers it to NPCI
- NPCI forwards the request to Payee PSP (GPay) for address verification and authorisation
- Payee PSP resolves the request and provides the account details of the payee to the NPCI server
- NPCI checks with the Remitter bank (HDFC) and debits the fund from the payer's account
- Remitter bank sends response to NPCI
- NPCI sends a credit request to the beneficiary's bank (SBI) and credits the fund to the payee's account