'Myntra cashback users are now on PhonePe'- Why every e-commerce company wants a bite of UPI.

Mobile payments start-up PhonePe, which is owned by Flipkart, in partnership with Yes Bank launched unified payments interface (UPI) based payments app last week.

PhonePe app users can send or receive money to and from friends and family, without exchanging the bank account details.The app also offers features such as bill-split, mobile recharge and bill payments. Myntra cashback users will be PhonePe users automatically. Reports suggest that PhonePe will also be integrated with Flipkart Money. So what is PhonePe and how will it work?

PhonePe allows you to link bank accounts securely to your smartphone using National Payments Corporation of India’s encrypted software.

Once you get linked, you can transfer money or merchant payments by just entering a 4-6 digit MPIN. There is no OTP(One time password) required.

If PhonePe works out well, it may help Flipkart reduce the number of cash transactions, while lowering transaction costs and making its supply chain more efficient for all its businesses. This is mainly why every e-commerce company wants to join the UPI bandwagon.

The National Payments Corporation of India (NPCI) started work on this technology in February 2015 and launched it this August. Wait, but what is UPI?

United Payments Interface or UPI was launched with much enthusiasm recently and 21 banks have already gone live with their offerings.

UPI is a payments system simply- just like a demand draft, cheque, your debit or credit card, or a mobile wallet. It is based on the IMPS (Immediate Payment Service) system that you use with your netbanking app, except this is available 24x7, even on weekends and holidays.

READ ALSO- UPI is forcing Paytm, MobiKwik to diversify business

Just like an ATM service, it is interoperable between banks whether Yes bank, ICICI bank or Axis Bank. Banks like SBI, Induslnd and HDFC are supposed to get on board by November

UPI is only available for Andriod users as of now. You have to download the UPI app from Google Playstore, verify your phone number, and then link your bank account to the mobile app. After confirming your bank details, you can start using the app to send or receive money easily.After verification, you can send or receive funds up to Rs 1 lakh to or from any person or establishment after a request from the other person of the transaction who must also have a unique virtual address or ID.

Currently, there aren't too many use cases for UPI yet but you can be expect to use it to do person to person transfers, directly to a bank account. Instances like paying your rent, and payment to shops that sell high value items, payments via bank transfers; will get more accessible.

With Myntra adopting this technology, you can easily pay your COD orders via PhonePe app in person. Reports suggest that other Indian E-commerce giants such as Amazon, Snapdeal and PayTM are also expected to integrate UPI on their platform in the coming months.

This can be the simple One Time Password to the inclusion we have been craving in the fin-tech space.