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NPCI Launches ‘UPI Circle’ for Secure Delegated Payments with Trusted Users

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In a significant move to further enhance the security and convenience of digital transactions in India, the National Payments Corporation of India (NPCI) has introduced a groundbreaking feature called ‘UPI Circle’ on its Unified Payments Interface (UPI) platform. This innovative feature enables primary UPI account holders to securely delegate payment responsibilities to trusted secondary users, paving the way for more versatile and secure financial interactions.

Introduction to UPI Circle

Unified Payments Interface (UPI) has been at the forefront of the digital payment revolution in India, offering seamless, real-time transactions between bank accounts. With the introduction of UPI Circle, NPCI is taking a significant step forward in enhancing the flexibility and security of UPI transactions. This new feature allows primary UPI account holders to delegate payment responsibilities to secondary users within a trusted circle, thereby expanding the usability of UPI for various demographics, including the elderly, children, and dependent family members.

The Evolution of UPI: A Brief Overview

Since its launch, UPI has transformed the way Indians transact, making digital payments more accessible and widespread. Over the years, UPI has seen a tremendous surge in adoption, with millions of users across the country leveraging its convenience for everyday transactions. The introduction of UPI Circle is a testament to NPCI’s commitment to continuously innovate and adapt to the evolving needs of its users.

Key Features of UPI Circle

1. Primary and Secondary User Roles

At the core of UPI Circle are the roles of the Primary User and the Secondary User. The primary user is the account holder who initiates the circle and controls the delegation of payment responsibilities. The secondary user, on the other hand, is a trusted individual who is granted partial or full access to the account for making payments. This structure ensures that the primary user retains control while allowing for convenient delegation.

2. Full Delegation vs. Partial Delegation

UPI Circle offers two types of delegation: Full Delegation and Partial Delegation. In full delegation, the primary user authorizes the secondary user to initiate and complete transactions within predefined spending limits, without requiring further approval. Partial delegation, however, allows the secondary user to initiate transactions, but the primary user must authenticate and finalize the payment using their UPI PIN.

3. Enhanced Security Features

Security is a paramount concern in digital transactions, and UPI Circle is designed with robust security measures to protect users. For instance, UPI apps ensure that app passcode/biometrics (finger/face) are mandatory for all secondary users. Additionally, the primary user has visibility of all transactions performed by secondary users, providing an added layer of security and control.

4. Customizable Spending Limits

UPI Circle offers the flexibility to set spending limits for secondary users. For full delegation, there is a maximum monthly limit of ₹15,000 per delegation and a maximum per transaction limit of ₹5,000. These limits ensure that the primary user can control the extent of delegation, minimizing the risk of misuse.

The Impact of UPI Circle on Digital Payments

1. Empowering Dependent Users

One of the most significant benefits of UPI Circle is its ability to empower dependent users. For example, parents can delegate payment responsibilities to their children, allowing them to manage expenses while maintaining control. Similarly, elderly citizens who may not be comfortable with digital transactions can delegate payments to their children, ensuring their financial needs are met without compromising security.

2. Facilitating Group-Based Financial Interactions

UPI Circle has the potential to revolutionize group-based financial interactions, such as those within gig economies or collaborative platforms. By allowing primary users to delegate payment responsibilities to multiple secondary users, UPI Circle can streamline the process of settling payments or pooling resources in real-time. This feature is particularly beneficial for small businesses, community groups, and other collaborative endeavors.

3. Reducing the Risk of Fraud

By limiting the delegation to trusted individuals and setting strict spending limits, UPI Circle significantly reduces the risk of fraud. The primary user retains full control over the delegation process and can monitor all transactions, ensuring that the feature is used responsibly and securely.

How to Set Up and Use UPI Circle

1. Initiating UPI Circle

To initiate a UPI Circle, the primary user must select the UPI app of their choice and follow the app’s process for linking a secondary user. This involves scanning the QR code or entering the UPI ID of the secondary user, followed by selecting the contact number from the contact list. The primary user can delegate up to five secondary users.

2. Linking Secondary Users

Secondary users can accept delegation from only one primary user. During the linking process, the primary user must authorize the secondary user for either full or partial delegation. Once the delegation is set up, the primary user has the option to monitor and control the usage of the delegated account.

3. Managing and Monitoring Transactions

The primary user has full visibility of transactions performed by secondary users through their UPI app and bank account statements. This transparency ensures that the primary user can track all delegated payments, thereby reducing the risk of unauthorized transactions.

NPCI Guidelines for UPI Circle

NPCI has issued several guidelines to ensure the safe and effective use of UPI Circle:

  • Independent User Journeys: UPI apps and Payment Service Providers (PSPs) offer independent user journeys for primary and secondary users. Each user can choose their preferred UPI app.
  • Mandatory Security Measures: App passcodes or biometric authentication is mandatory for secondary users. Primary users must authorize the linking process.
  • Limited Control: The primary user has limited control over setting usage limits for secondary users.
  • Cooling Period: After successful linking, a daily transaction limit of ₹5,000 is prescribed during the first 24 hours.
  • Adherence to RBI Guidelines: Members must adhere to RBI guidelines on turnaround time and customer compensation for failed transactions.

Potential Challenges and Considerations

1. Ensuring Trust and Security

While UPI Circle offers numerous benefits, it also requires careful consideration when delegating payment responsibilities. Primary users must ensure that they only delegate to trusted individuals and set strict limits on the extent of delegation and the amounts involved. This is crucial to avoid potential misuse and fraud.

2. Adoption Among Elderly Users

One of the primary target groups for UPI Circle is elderly users who may not be comfortable with digital payments. While this feature offers them a convenient way to manage their finances, it may require additional guidance and support to ensure they fully understand how to use the feature securely.

3. Technical Glitches and User Experience

As with any new digital feature, there may be initial technical glitches or user experience issues. NPCI and PSPs must ensure that these are addressed promptly to avoid any inconvenience to users.

Conclusion: A New Era for Digital Payments

The launch of UPI Circle marks a significant milestone in the evolution of digital payments in India. By enabling secure delegated payments, NPCI has opened up new possibilities for how UPI can be used, making it more versatile and accessible to a broader range of users. Whether it’s empowering dependent users, facilitating group-based financial interactions, or reducing the risk of fraud, UPI Circle has the potential to transform the way Indians manage their finances. As users begin to explore and adopt this new feature, it will be interesting to see how it shapes the future of digital payments in the country.

In conclusion, UPI Circle is not just a new feature; it’s a step toward a more inclusive, secure, and flexible digital economy. As NPCI continues to innovate, we can expect to see even more advancements that will further solidify UPI’s position as the backbone of digital payments in India.