Virtual Payment Address (VPA), commonly known as UPI ID, is a unique marker that serves as a proxy for your bank account. It enables you to facilitate payments without revealing your account information, always in the username@bankhandle format. While using UPI has largely become the norm for most people today, one segment it has greatly benefited is small businesses around us. Let us understand these benefits.
Low to no set-up cost
To set up card payments, businesses need a POS machine to swipe cards. Here, you have to pay a significant amount for the machine and various fees. Therefore, businesses often get restricted to cash payments. This is where VPA comes in. To facilitate UPI payments, you only need to print your QR code, costing a mere few rupees. Even purchasing a QR machine costs significantly less.
Instant payment settlement
Card payments usually take T+1 or T+2 days to settle after a multi-step process. This is not the case for using UPI. Payments at a business’s VPA are settled instantly, within seconds. Today, UPI apps even let you search by name or phone number. Internally, this still maps to the recipient’s VPA. So, you get the speed and convenience without compromising on the security that VPA provides.
Hassle-free payment tracking
Every UPI transaction is assigned a unique ID. UPI apps also provide other pertinent information regarding the parties involved. Therefore, every transaction is recorded and can be tracked by business owners for relevant purposes. This is particularly helpful during reconciliation and dispute resolution.
Additionally, the hassle of tracking physical cash is evaporated with a VPA-backed system. Counting significant physical cash is tedious and prone to human error. This is especially helpful for small businesses that often lack dedicated cash registers or billing software.
Scope for a wider customer base
MSMEs, particularly local kirana stores, serve customers who pay in various ways. Many a time, customers purchase on credit when they are not carrying cash, or having the right change becomes a hassle for vendors. VPA eliminates all of this. It removes the dependency on physical cash while also allowing remote payments. This effectively widens the potential customer base.
Easy and instant refunds
Refunding a customer through VPA is far simpler than handling cash. A refund can be initiated in seconds directly to the party’s VPA. UPI also benefits from zero transaction charges. Generous transaction limits to verified businesses, making VPA a viable option even for high-value payments.
Conclusion
Having UPI as the preferred means of payment is not limited to India but is expanding to other countries as well. The features and benefits of a VPA-backed system are vast, as you can see when a QR code appears on a fruit vendor’s cart, who likely would not know the answer to the question “What is VPA?”
That said, the technology is not without its limitations or misuses. These range from QR code fraud to data storage concerns. Therefore, it is essential to exercise responsible usage.
