Difference Between UPI and Internet Banking

Unified Payment Interface (UPI) and Internet banking are two of the most commonly used banking tools which facilitate the user to perform several baking operations through the internet.

UPI vs Internet Banking

The difference between UPI and Internet Banking is that UPI is mainly used to transfer funds (both peer to peer and merchant payments) using the various mobile applications offering this service. Whereas, Internet Banking offers fund-transfer services along with other banking options like loan applications, credit card applications, and opening of a fixed deposit account.

UPI vs Internet Banking 1

UPI and Internet banking both are used as instant payment systems but require different levels of inputs in order to complete the transaction. UPI only requires the Virtual Payment Address (VPA) of the beneficiary whereas Internet Banking requires the beneficiary’s bank account details.

Today, more and more people are opting for UPI over Internet Banking owing to its ease of access and lower chances of transaction error. However, Internet Banking is necessary to perform certain banking operations where UPI is impuissant.


Comparison Table

Parameter of ComparisonUPIInternet Banking
Speed of transactionThe average number of touch inputs from the customer to complete a transaction is 6.The average number of touch inputs from the customer to complete a transaction is 50.
Cost of fund transferNo extra amount is charged.A small amount of fees is charged per transaction (usually Rs. 5 to Rs. 15).
Banks offering service29 banks.Almost all banks.
Beneficiary additionOnly the Virtual Payment Address (VPA) of the beneficiary is required.Pre-addition of beneficiary’s details (like bank account number and IFSC code) is required.


What is UPI?

Unified Payment Interface (UPI) is an instantaneous real-time online payment system that allows instant transfer of funds from one bank account to another. This system is capable of handling transactions from different bank accounts through a single mobile application.

A VPA (Virtual Payment Address) needs to be created by the user in order to access the services offered by UPI. This VPA is linked to the user’s bank account and represents their financial address.

Hence, the user need not enter all the details of their bank account like the account number or IFSC code every time they wish to avail one of UPI’s services once the VPA is linked to their bank account.

UPI incorporates a 2 Factor Authentication which is in compliance with the regulatory guidelines and this is what makes this service so secure.

Some of the key features of UPI include the following:

  1. UPI’s services can be accessed anytime as the platform is completely digital.
  2. Fund transfers are instant and hence way faster than conventional methods like NEFT.
  3. Different bank accounts can be accessed using a single mobile application.
  4. Uses MPIN (Mobile Banking Personal Identification Number) to confirm each transaction as a part of the 2 Factor Authentication.
  5. Transactions can be done using a scannable QR code which has enclosed VPA.

What is Internet Banking?

Internet banking (or e-banking) is a service offered by banks and financial institutions that facilitates the customers with access to the banking services via an online platform. However, to avail this provision, the customer must register for internet banking at their respective bank.

In order to access the services offered by internet banking the user must first enter their registered customer ID and password as a login procedure.

Since the e-banking account of a customer holds their vital financial information, security is of utmost importance. Hence, the internet banking platforms use two types of security methods, PINs/TANs and signature based online banking.

A PIN is used to facilitate the login and the TANs are one-time passwords which securely approve the transactions. Signature based online banking refers to the e-banking where all transactions are signed and encrypted digitally.

Some of the key features of Internet Banking include the following:

  1. Payment for services like mobile or electricity bill (merchant payments) and fund transfers can easily be done.
  2. The user can open a fixed deposit account without physically going to the bank.
  3. Services like ordering for a cheque book are incorporated.
  4. The user can download the account statements.
  5. Facilitates loan and credit card applications.
internet banking

Main Differences Between UPI and Internet Banking

  1. UPI does not require the addition of any beneficiary in order to transfer the funds, only their Virtual Payment Address (VPA) is sufficient.
    To perform a transaction using Internet Banking, the details of the beneficiary, including the bank account number and IFSC code, are required; however, this need not be repeated for every transaction once the beneficiary is added.
  2. UPI can only be accessed through the mobile applications offering this service. Whereas, Internet Banking can be accessed through the website or mobile application of that particular bank.
  3. Transactions made through UPI are currently free. However, banks are planning to induce minimal charges on each transaction.
    On the other hand, Internet banking charges around Rs. 5 to Rs. 15 per transaction.
  4. Internet banking offers a large range of services like loan applications, credit card applications and opening od a fixed deposit account.
    Whereas, UPI is used for find transfer related work.
  5. UPI has a very high success rate whereas Internet banking transactions register 10% lower success rate than the former.
Difference Between UPI and Internet Banking


  1. https://www.igi-global.com/chapter/technological-advancements-in-payments/174877
  2. https://gujaratresearchsociety.in/index.php/JGRS/article/view/1662
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