NPCI launches 'UPI Circle' for secure delegated payments with trusted users

Primary users can link their UPI accounts with secondary users, granting them the ability to make payments on their behalf

The National Payments Corporation of India (NPCI) has introduced a new feature called ‘UPI Circle’ on its Unified Payments Interface (UPI) platform. This feature allows primary UPI account holders to securely delegate payment responsibilities to trusted secondary users. 

What is UPI Circle?

 

"UPI Circle-Delegate Payments is a feature where a UPI user acts as a primary link with their trusted secondary users on their UPI App for either partial or full delegation,” says NPCI in a release dated August 13, 2024.

 

When was the new feature announced?

 

The Reserve Bank of India introduced this facility during its August MPC meeting. “Delegated Payments” would allow an individual (primary user) to set a UPI transaction limit for another individual (secondary user) on the primary user’s bank account. This product is expected to add to the reach and usage of digital payments across the country. Detailed instructions will be issued shortly.” the central bank said in its MPC meeting.

 

“Delegated payments through UPI will help consumers in many ways. For one, it can help consumers manage payments for their dependents. For example, a parent can pay on behalf of their children. Similarly, elderly citizens don’t need to make payments themselves; instead delegate the payments to their children. This will help the primary account holder keep a check on the payments being made, to ensure there are no frauds and also spend within a budget. It is also more convenient to make the payment on behalf of a dependant, rather than to give them access to a bank account or a larger amount of money,” said Vishal Maru, Global Processing Head at Financial Software and Systems.  

 

How do UPI Circle-Delegate payments work?

 

Primary User: The account holder who initiates the Circle and controls the delegation.

 

Secondary User: A trusted individual granted partial or full access to the account for making payments.

 

UPI Circle enables two types of delegation:

 

Full Delegation: The primary user authorises the secondary user to initiate and complete transactions within predefined spending limits, without requiring further approval.

 

Partial Delegation: The secondary user can initiate transactions, but the primary user must authenticate and finalise the payment using their UPI PIN.

“This innovation will not only drive convenience but also enhance security by reducing the risk of fraud within these trusted ecosystems. Additionally, UPI Circle can be leveraged for creating micro-communities within gig economies or collaborative platforms, where members can easily settle payments or pool resources in real time. The versatility of this feature holds the potential to significantly broaden the scope of UPI beyond just individual transactions, enabling it to cater to more niche, group-based financial interactions,” said Ajay Rajan, Country Head - Government, Multinational & International Business, Transaction Banking & Knowledge Units, Yes Bank.

 

UPI Circle:  NPCI guidelines

 

Members are required to ensure the below guidelines are followed:

 

UPI apps and PSP offer independent user journeys for Primary and Secondary users. Users shall have their own choice of UPI app.

 

UPI apps shall ensure app passcode/biometrics (finger/face) is mandatory for all secondary users. For linking, the primary user shall scan the QR/enter the UPI ID followed by selecting of contact number from the contact list. In the later phase, primary users shall be able to link with secondary users in lieu of a QR code scan by selecting of contact number from the contact list only.

 

A primary user can delegate up to 5 secondary users and a secondary user can accept delegation from only one primary user. Members shall ensure that the primary authorises the secondary user on either full or partial delegation.

 

Members shall ensure limited control is available for the primary to set usage controls over their secondary users. For full delegation, members shall ensure a maximum monthly limit of ~15,000 per delegation and a maximum per transaction limit of ~5000.

 

Existing UPI limits shall be applicable in case of partial delegation. Members shall ensure that during the cooling period - first 24 hours, a daily transaction limit of ~5000 shall be prescribed after successful linking of primary and secondary users for both full and partial delegation.

 

Members shall ensure that the primary user has visibility of transactions performed by secondary users on their UPI app and bank account statement.

 

Members shall adhere to RBI guidelines on ‘Harmonisation of Turn Around Time’ and customer compensation for failed transactions using authorised payment systems.

 

Online dispute resolution functionality shall be available for UPI transactions.

“While the ability to delegate UPI payments does provide greater access for the unbanked and others without UPI access, the primary UPI user will need to be mindful to restrict access to trusted, known secondary users and to set strict limits on the extent of delegation and the amounts involved,” said Vivek Boray, Partner, King Stubb & Kasiva, Advocates and Attorneys.