Why UPI collection is better than a Payment Gateway

Fintech

Jan 31, 2025

Why UPI Collection is Better than Payment Gateway

UPI collection is leading the way in quickly developing digital transactions as businesses and consumers seek the quickest, most secure, and cost-effective solution. Among the available options, the UPI collection Stands out as a superior alternative to traditional payment gateways.

But why is that? Let’s explore how UPI Collection beats payment gateways in terms of speed, cost, security, and ease of use.

UPI Collection
What is a Payment Gateway?
Differences Between UPI Collection and Payment Gateway
How UPI Collection Works
Why UPI Collection is Faster Than a Payment Gateway
Cost Comparison: UPI Collection vs. Payment Gateway
Features of the UPI Collection
Simplified Integration for Businesses
User Experience and Convenience
UPI Collection for Small Businesses
UPI Collection for Large Enterprise
Conclusion
FAQs

UPI Collection

UPI Collection is a real-time payment system that facilitates the immediate transfer of funds between bank accounts using a mobile number, UPI ID, or QR code. This system simplifies the payment process, removes the necessity for complex payment procedures, and provides a smooth experience for both businesses and consumers.

What is a Payment Gateway?

A payment gateway is a technology solution that facilitates online transactions by serving as an intermediary between consumers and businesses. It involves multiple steps including card verification, user authentication, and transaction approval which may require more time than transactions conducted through UPI.

Payment Methods Supported by Payment Gateways:

A payment gateway offers a variety of payment options, including:

Credit Cards (Visa, Mastercard, RuPay, American Express, etc.)
Debit Cards (Visa, Mastercard, RuPay, etc.)
Net Banking (Transactions through bank accounts)
Digital Wallets (Paytm Wallet, PhonePe Wallet, Amazon Pay, etc.)
EMI (Equated Monthly Installments)
Buy Now, Pay Later (BNPL) Solutions

Popular Payment Gateways in India:

Razorpay
Paytm Payment Gateway
Just pay
Cashfree
CCAvenue
Instamojo
BillDesk
PayU

Difference between UPI Collection and Payment Gateway

Features	UPI Collection	Payment Gateway
Charges	Low ( 0.05%- 0.5%)	High ( 0.10%-3%)
Settlement Time	Same-day settlement	T+1 or T+2, if same - day, it occurs within 4-5 hours
Transactional Flow	Intent flow ( direct, faster, and smooth payment experience)	Standard payment flow ( redirect to multiple steps, making it slightly longer
User Experience	Faster and smoother payments with intent flow	Additional measures may be necessary such as OTP or redirection, leading to a longer processing time
Payment Methods	Only UPI	UPI, Credit/Debit Card, Net Banking, Wallets, EMI, BNPl
Speed	Very fast	Can be slow due to multiple steps
Integration	Easy	More complex
Best for	Businesses looking for fast, low-cost UPI payments	Businesses require multiple payment options.

How UPI Collection Works

Step1: Using UPI Collection is simple
Step 2: Open the UPI-enabled app
Step 3:Enter the recipient’s UPI ID or scan the QR Code
Step 4: Input the amount and confirm the transaction.
Step 5: Authenticate with a secure PIN, and the transaction will be completed immediately.

Why UPI Collection is Faster Than a Payment Gateway

UPI Transaction occur in real-time and involve minimal authentication steps, they are significantly faster compared to payment gateways, which require card processing, OTP verification, and banking approvals

Cost Comparison: UPI Collection vs. Payment Gateway

UPI Collection: UPI transactions are often free or have minimal charges , making them cost-effective
Payment Gateway: Payment gateway charges transaction fees that may reach 0.10-3% per transaction increasing the cost for businesses.

Features of the UPI Collection

Two-step verification is required for every transaction.
There is no necessity to disclose sensitive banking information, as only the UPI ID is utilized.
Fraud detection systems are enhanced by artificial intelligence and machine learning technologies.

Simplified Integration for Businesses

Businesses can easily integrate UPI Collection Collection into their payment system without the need for significant infrastructure changes, unlike payment gateways that demand extensive API integration and compliance requirements.

Customer Experience and Accessibility

UPI allows customers to make payments directly from their bank accounts without the need to input card information. In comparison, payment gateways require extra steps, such as entering card numbers and CVVs, which can result in increased transaction drop-offs.

UPI Collection for Small Businesses

UPI Collection provides small businesses with an affordable and user-friendly solution that enables faster transactions without the need for complex payment gateway setups

UPI Collection for Large Enterprises

UPI Collection provides a large business advantage from the scalability of UPI, which enables them to handle a high volume of transactions effectively with lower costs.

Conclusion

UPI Collection offers numerous advantages compared to traditional payment gateways including faster transactions, reduced costs, improved security, and an enhanced user experience. Regardless of whether you operate a small business or a large enterprise, the integration of UPI Collection can greatly improve your payment processing efficiency and increase customer satisfaction.

Frequently Asked Question

What is the difference between UPI Collection and payment gateway?
It is, in fact, a real-time payment system that facilitates immediate fund transfers between bank accounts through mobile devices. While payment gateways are designed to handle online transactions by processing payments, UPI functions as a payment method that permits users to transfer and receive money directly from their bank accounts.

Can I use UPI Collection as a payment gateway?
A Unified Payments Interface (UPI) payment gateway is a digital platform that enables online transactions utilizing the UPI framework. It serves as an intermediary between a customer's bank account and a merchant's bank account, facilitating immediate money transfers through a secure and real-time system.

How is UPI Collection better than other payment methods?
Instant Transfer: UPI Collection facilitates real-time fund transfers, Making it faster and more efficient than traditional methods such as NEFT, RTGS, or IMPS.
24/7 Availability: UPI Collection services are available round the clock, allowing users to make transactions at any time, regardless of bank working hours or holiday

Is Google Pay a payment gateway?
Yes, Google Pay supports onboarding e-commerce platforms. Partners such as payment processors, gateway, or e-commerce platforms that provide a checkout page for their merchants can utilize Google Pay’s hosted checkout functionality.