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All You Need To Know About VPA In The UPI Payment System

The year 2016 was historic for the financial sector of India. Most Indians still recollect its memories with the sudden demonetization of the former 500 and 1000 INR notes. However, while that happened towards the end of the year, something equally remarkable was established towards the second quarter. In April, Unified Payments Interface, or UPI, was unveiled by the National Payments Corporation of India. So standing today, UPI has taken over as one of the online payment systems in just five years.

As per research, in the financial year 2021 alone, the aggregate value of UPI transactions reached as high as 41 trillion Indian Rupees. This was a nearly hundred-percent increase from the statistics received for the preceding year. By bringing together multiple banking features within one mobile application, UPI resolved the complicated and taxing issue of online banking to make it more user-friendly. Related to UPI is another term, VPA, that forms the foundation of the whole UPI framework.

What is a VPA?

Virtual Payment Address, or VPA, is a unique identifier or address that distinguishes a UPI user from all other users in the network. It is used to identify the UPI user, similar to how a bank account number is used to identify a bank account. Even though UPI transactions are direct bank to bank transfers, the VPA is not directly associated with either of the bank accounts, and neither is it a replacement for the bank account number. It just points towards the account via the UPI framework. The general format of a VPA in India is name@bank.

What is the importance of VPA?

The sender and the receiver for a UPI transaction are identified using their VPA. When transferring funds through UPI, the sender enters the VPA of the receiver in the UPI application to process the payment. In the case of a UPI payment gateway, when the customer selects the UPI payment option, the application opens automatically with the VPA of the gateway service pre-filled. The customer can, thus, pay without having to know the gateway company’s VPA. In a few cases, the customer is asked to enter their VPA in the gateway, and an automatic fund request is received in the UPI application.

What are the advantages of VPA?


To make a payment via net banking, the sender needs to know the receiver’s bank account number, IFSC code, account holder’s name and add the receiver as a beneficiary. Mobile wallet payments are linked to the mobile number and are mostly restricted to that mobile wallet application. As compared to this, UPI is the best online payment systems as all the sender needs to know to identify the receiver is the VPA. It is short and easy to remember, making transactions extremely simple. There is also a directive from NPCI to all banks and financial institutions to have user-friendly VPAs.

Moreover, most UPI applications are not limited to users of that application. This essentially means that VPA transcends beyond the UPI application generated and can receive funds from any compatible UPI application. All these advantages make VPA a viable choice of identifier over the age-old mechanisms.

Link to Multiple Bank Accounts

Merchants generally have more than one bank account. This may be to differentiate business and personal funds or to segregate business funds based on specific categories. Whatever the reason may be, managing so many accounts becomes an added burden. UPI can be used to unify all the reports in one place for easy access via a single VPA. Neither the merchant nor the customers have to deal with multiple account numbers for transactions, eliminating confusion to a great extent. Although the VPA can link only to one primary bank account at a time, switching between the bank accounts is relatively easy with only a few clicks.

Improved Security

A UPI payment gateway offers more security in payments by making transactions possible via VPA. Services like Zaakpay provide additional protection through PCI DSS compliance and SSL encryption. The merchant’s or customer’s account number or any related details need not be disclosed in the process, making it safe for transactions. If needed, changing the VPA is also reasonably straightforward and gives a whole new identity to the user.

Converting to QR Code

There’s also a provision to create a QR code of the VPA. By using this, any merchant can further simplify the payment process. The VPA gets encoded within the QR code, and payments can be made through scanning that helps avoid mistyping during a transaction. Merchants can create a direct QR code for payments and put it on the website, email, or brick-and-mortar shop.

What are the types of VPA?

VPA are primarily of three types:


Transactions between two individuals are through P2P or peer-to-peer VPA using a suitable UPI application.


Peer-to-merchant VPA is used to receive funds into the merchant account of the business. Merchants use this to receive funds through a UPI payment gateway such as Zaakpay. Post a successful verification of the company; a VPA is allotted to the business to receive funds.


Similar to regular P2M but with an additional perk. Instead of having the same VPA for all transactions, the merchant gets a customized VPA for each transaction. Primarily valuable for financial and educational sectors that receive bulk recurring payments.


By reaping the benefits of VPA and a gateway service, businesses can throttle the profits to new heights. Zaakpay is the best online payment gateway service compatible with most UPI applications and meets business needs at affordable pricing.

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