Low-Level Diagram(LLD) for UPI System Design

A low-level diagram for a UPI system illustrates the detailed interaction between its core components. At the user level, we have mobile apps and web interfaces that allow users to register, authenticate, and initiate transactions. These interfaces communicate with the UPI service through APIs, which are crucial for handling requests and responses.

• The UPI service, managed by the National Payments Corporation of India (NPCI), acts as a central switch that routes transaction requests to the appropriate bank systems. Each participating bank has backend systems that verify user account details, check balances, and process transactions.
• The UPI switch ensures real-time transaction processing and settlement by securely relaying information between the payer’s and payee’s banks. Additionally, the system includes security modules for encryption and fraud detection, ensuring the integrity and confidentiality of transactions.
• Third-party service providers integrate with the UPI service via APIs to offer UPI functionalities within their apps, expanding the system’s reach and usability.

The diagram illustrates the architecture and flow of the Unified Payments Interface (UPI) system, which is a real-time payment system developed by the National Payments Corporation of India (NPCI). It shows how different entities interact within the UPI ecosystem to facilitate transactions. Here’s a detailed explanation:

1. Entities and Components

• Mobile Application:
  • USSD (*99#): A service that allows users to perform banking transactions using a basic mobile phone without internet access.
  • 3rd Party Apps (Collect Only): Third-party applications that can initiate payment collection requests.
  • Internet Banking: Traditional internet banking services accessed via mobile applications.
• Banks: Standard Interface: The interface provided by banks to interact with the UPI system.
• Payment Service Providers (PSPs): Entities that provide payment services to customers and merchants, facilitating transactions through the UPI system.
• Unified Payment Interface (UPI): The central platform that processes UPI transactions, developed and managed by NPCI.
• Central Repository: A centralized database that stores transaction data and other relevant information.
• NPCI: National Payments Corporation of India, the organization that manages the UPI system.

2. Other Payment Systems:

• APBS/NACH: Aadhaar Payment Bridge System/National Automated Clearing House.
• IMPS: Immediate Payment Service.
• AEPS: Aadhaar Enabled Payment System.
• RuPay: A domestic card payment network.
• Ecom: E-commerce transactions.

3. Flow of Transactions:

• USSD (*99#):
  • Users can initiate transactions using the USSD code *99# on their mobile phones.
  • The request is sent to the Central Repository and then to the UPI system for processing.
• Mobile Applications:
  • Users can initiate transactions using various mobile applications, including third-party apps and internet banking apps.
  • These applications interact with the banks’ standard interfaces to process transactions.
• Banks:
  • Banks provide a standard interface to interact with the UPI system.
  • They act as intermediaries between the users and the UPI system, facilitating the transactions.
• Payment Service Providers (PSPs):
  • PSPs facilitate the transactions by interacting with the UPI system and the banks.
  • They ensure the smooth processing of transactions initiated by users.
• Unified Payment Interface (UPI):
  • The UPI system processes the transactions by interacting with the banks and other payment systems.
  • It ensures real-time processing and settlement of transactions.
• Central Repository:
  • The Central Repository stores transaction data and other relevant information.
  • It interacts with the UPI system to provide necessary data for transaction processing.
• Other Payment Systems:
  • The UPI system can interact with other payment systems like APBS/NACH, IMPS, AEPS, RuPay, and Ecom to facilitate various types of transactions.

The diagram shows how users can initiate transactions using different methods (USSD, mobile apps, internet banking). Banks provide a standard interface to interact with the UPI system. Payment Service Providers (PSPs) facilitate the transactions. The UPI system processes the transactions in real-time, interacting with banks and other payment systems. The Central Repository stores transaction data and interacts with the UPI system.

Designing a Unified Payments Interface (UPI) system involves creating an architecture that enables real-time inter-bank transactions through a seamless and secure platform. Key components include user interfaces, a central UPI switch managed by the National Payments Corporation of India (NPCI), backend systems of participating banks, and third-party service providers.

• The system supports core functionalities such as user registration and authentication, payment initiation and authorization, inter-bank transaction processing, and real-time settlement.
• Security measures like encryption and multi-factor authentication ensure compliance and protect against fraud, making UPI a reliable and efficient payment solution.
• The UPI is a real-time payment system that facilitates inter-bank transactions by instantly transferring funds between two bank accounts on a mobile platform.