MC Explains: How NPCI's new UPI Circle feature benefits users and what precautions to take

The UPI circle feature allows two individuals to use one bank account to make UPI payments.

Imagine your parents are not well-versed in using a mobile phone, or even if they are, they have not fully learnt to use UPI (Unified Payments Interface). Or consider a scenario where you wish to provide your children with pocket money without going overboard.

Enter UPI Circle, a new facility where multiple people can manage their UPI from a single bank account.

What is UPI Circle?

The UPI Circle feature allows two individuals to use one bank account to make UPI payments. It aims to support those who currently rely on others for financial management, enabling them to take control of their own financial transactions.

It allows a primary user (e.g., a parent) to delegate transaction authority to a secondary user (e.g., a child or senior citizen), allowing them to make payments from the primary user's account.

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“This feature is particularly beneficial for family members such as senior citizens, spouses, or children who may not have their own bank account or typically rely on a shared family account for financial transactions,” says Rahul Jain, CFO, NTT DATA Payment Services India.

“Overall, UPI Circle is likely to bring ease and convenience in managing all our day-to-day payments and make a positive change in the lives of crores of UPI users,” says Ambuj Chandna, Head – Products, Consumer Bank, Kotak Mahindra Bank. With this, the need for and use of cash will see further decline, he adds.

Delegation options

Members must ensure that the primary user explicitly authorises the secondary user for either full or partial delegation, providing clear consent and defining the scope of transaction authority.

Full delegation

In full delegation, the primary user grants the secondary user the authority to initiate and complete transactions within designated spending limits set by the primary user, ensuring a controlled and secure delegation of financial authority.

To facilitate full delegation, primary members are required to set a monthly limit of Rs 15,000 per delegation and maximum per transaction limit of Rs 5,000, providing a safeguard against excessive transactions by the secondary user.

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Once authorised, the secondary user can initiate and complete transactions within the predefined spending limits without requiring further approval or consent from the primary user.

Partial delegation

In partial delegation, the secondary user can initiate transactions, but the primary user retains control and must authenticate and finalise the payment using their UPI PIN, ensuring an additional layer of security and verification.

By requiring primary user authentication for transactions, this setup strikes a perfect balance between security and convenience.

Key guidelines for UPI Circle

To ensure a secure and seamless user experience, the NPCI has established comprehensive guidelines for UPI applications and payment service providers (PSPs).

Just like the primary user, the secondary user will also get a password and a biometric authentication (fingerprint or face recognition), to be able to lock and unlock the app.

Users will have the freedom to choose their preferred UPI app, allowing them to – select the app that best suits their needs, manage their accounts and transactions independently and enjoy a seamless and secure payment experience.

To link the secondary user, the primary user needs to scan a unique QR code or enter the secondary user's UPI ID.

After scanning the QR code or entering the UPI ID, the primary user will then select the secondary user's contact from their phone's contact list. This ensures that the correct secondary user is linked to the primary user's account. To enhance security, manual entry of mobile numbers is not permitted.

Last but not least, a primary user can delegate transaction authority to up to five secondary users while a secondary user can only accept delegation from a single primary user.

Benefits to consumers

Experts say UPI Circle can spread financial inclusion in rural areas where adaptation to technology might be a tad lower than in urban areas. “This feature will help prevent overspending by secondary users, making it easier for primary users to monitor and manage financial activities, maintain budget discipline, and ensure transparent accountability,” says Jain.

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“This innovation will not only drive convenience but also enhance security by reducing the risk of fraud within these trusted ecosystems,” says Ajay Rajan, Country Head - Government, Multinational & International Business, Transaction Banking & Knowledge Units, YES Bank, focused on UPI Circle.

Precautions UPI users should take

Secondary users should be regularly educated and informed about the latest UPI fraud trends, tactics, and prevention strategies, empowering them to stay vigilant, recognise potential threats, and take proactive measures to safeguard their financial information and transactions.

“Measures like strong user authentication, robust payment infrastructure, fraud detection systems, and limited authorisation should be implemented to prevent any risk of UPI scams in delegated payments,” Jain adds.