What is UPI Circle and how does it work?

The National Payments Corporation of India (NPCI) has launched ‘UPI Circle’ for delegated payments, which will further revolutionise the digital payment space in India. With UPI Circle, the primary user links their friends and families as secondary users to assist them in making digital payments.

UPI has become a pivotal force in India’s digital economy. In India, it has gained popularity as a payment mechanism; in the fiscal year 2023, there were 84 billion credit transactions. In the same fiscal year, UPI-based digital payments reached 139 trillion Indian rupees.

UPI third-party app PhonePe holds the highest market share of 48.38% of the total translation value, Google Pay with 37%, and Paytm with 7.82% hold second and third place, respectively, according to July 2024 data released by NPCI.

What is UPI Circle?

UPI Circle is a feature launched by NPCI that will help to make delegated payments either full or partial. With the UPI-powered app, a primary user can choose a secondary user and add them to their UPI circle. For consumers who either don’t have their bank account or rely on others for online purchases, the UPI Circle function seeks to bring easy digital payments through delegated payments.

The NPCI has set a maximum monthly limit of₹15,000 for secondary users, with a ₹5,000 cap on single transactions in full delegation. For the first twenty-four hours of use, there’s an additional ₹5,000 limit. For partial delegation, the Primary user will have the option to review the payment before authorising.

How Does it Work?

UPI Circle has two types of users: primary and secondary users, and two types of delegations: partial and full.

Primary user– The main user who has a bank account and UPI app to enable the payment. His bank account will be used for the payments. The primary user will allow the secondary user to make payments by adding them to their UPI Circle.

Secondary User– The person who initiates the payment, the Secondary user here uses the bank account of Primary users to make payments with the authorisation of Primary users. Here Secondary user will not need a bank account of his own.

Two types of delegation options are available-

Full delegation: With Full delegation, the secondary user can make payment on their end without the approval of the Primary user. Secondary users here can make a payment of a maximum of Rs. 15,000 per month and a maximum of Rs. 5,000 per transaction.

Partial delegation: In partial delegation, the Secondary user needs approval from the Primary user every time it makes a payment. The primary user here has full control over the secondary user. Transaction limits align with the daily UPI limits.

Setting up UPI circle

A Primary user can delegate up to 5 secondary users and a Secondary user can accept delegation from only one Primary user.

The following steps can be taken by users to activate this feature:

• The primary user must have a Bank account with a UPI app.
• Click “Add Family or Friends” from the UPI Circle menu in the chosen UPI app.
• Add Secondary users using phone contacts, QR code scanning, or UPI ID.
• Select “Full delegation or Partial delegation” to set permissions.
• Secondary users can start making payments as soon as they accept the invitation.

Features of UPI Circle

• Approve every payment- Grant your family, friends, and trusted people the ability to initiate payment requests, but retain ultimate control by approving each transaction with your UPI PIN on BHIM.
• Spend with limits- Permit someone to make a payment up to a predetermined amount without requiring your prompt consent. This solution streamlines financial transactions for others while upholding predetermined spending limitations, making it perfect for trustworthy individuals giving allowances or managing cash for elderly family members.
• Secure and User-friendly- Strong security and ease of use are combined in UPI Circle. This tool makes managing your finances easier while protecting your money, whether you’re a caregiver, spouse, or parent.

Benefits of UPI Circle

• Parents: With UPI Circle parents can control how their young ones do digital transactions. With this, Parents can ensure how their young ones are using digital payments and ensure they are spending only on the required things.

• Senior Citizen: As it is not easy for older people to hold cash and equally risky to make online payments on their own, With this feature now younger family members can delegate payments to older family members so that they can do stress-free payments.

• Business owner: Here Business owners can authorise their employees to make payments, like a car renting service owner can allow his employee to make payments at petrol stations which will reduce the trust issues between the employer and employee.

Conclusion

With the introduction of UPI Circle, the digital payments space is more revolutionised, as it will allow users with less financial literacy to integrate with the digital payment space without the worry of banking scams. With this, UPI can easily cater to the needs of various unserved sections, For parents it provides a tool to monitor their children’s spending; for senior citizens, it offers a safe way to handle digital transactions.

With the introduction of UPI Circle, NPCI has shown its commitment to advancing financial inclusion with security. It signifies a major progress in the fintech industry of India with enhanced flexibility and security.

₹8,375 Crore in UPI Transactions: A New Era for India’s Digital Economy