UPI Circle launched for delegate payments: Multiple people can use one UPI account; how to use UPI Circle, transaction limit

The National Payments Corporation of India (NPCI) has introduced a new feature on its Unified Payments Interface (UPI) platform that allows users to share their UPI accounts with others. Called “UPI Circle-Delegate Payments,” this feature allows primary account holders to delegate transaction rights to secondary users. UPI Circle Delegate Payments Does it work? Will you have full control over your UPI accounts while sharing them with other users? How can UPI Circle Delegate Payments benefit users? ET Wealth Online speaks to experts to decipher UPI’s new feature – ‘UPI Circle-Delegate Payments’.

What are UPI Circle Delegate Payments?

“UPI Circle-Delegate Payments is a feature where a UPI user acts as a primary user to link with his trusted secondary users on his UPI application for partial or full delegation,” NPCI said in a statement dated August 13, 2024.

As the term suggests, UPI Circle-Delegate Payments is a new option to delegate the payment function to a family member or acquaintance, explains KV Sheetal, General Manager, Digital Banking Operations, Bank of Baroda.

Rahul Jain, CFO, NTT DATA Payment Services India, explains that UPI Circle delegate payments will allow two people to use one bank account to make UPI payments. “These people can be family members such as senior citizens, spouses or children who do not have a bank account or who use a single bank account,” he adds.

In other words, UPI Circle delegate payments are UPI’s way of creating a seamless complement, says Ambuj Chandna, chief product officer at Consumer Bank. Kotak Mahindra Bank“Let’s say your child goes to school and every day he or she has to spend some money on transportation, stationery or snacks. Parents can delegate a daily budget to the student. In another case, your driver fills up your car’s gas tank while dropping off your guests; you can delegate and maintain approval control,” he explains.

How will UPI Circle delegate payments work?

For customers, delegating payments via UPI is a straightforward process. The primary user will need to create a mandate for the secondary user, says Shravan Shetty, managing director at Primus Partners. Moreover, the primary user can choose to delegate payments fully or partially, regardless of whether the customer is on the network. Deepak Chand Thakur, CEO and co-founder at NPST, explains, “With full delegation, the secondary user is given the authority to make payments directly up to the amount specified by the primary account holder. For partial delegation, the secondary user needs to submit a payment request for each transaction, which the primary user needs to approve with a UPI PIN before the payment can be processed, providing an additional layer of control and oversight. On the back-end, the system maintains a mapping of account permissions, manages and enforces transaction limits, and authorizes, routes, and processes transactions.”

UPI Circle Delegate Payments Transaction Limit

Remember that the primary user can also set the transaction limit for the secondary user. For full delegation of UPI Circle-Delegate payments, the maximum monthly limit will be Rs 15,000 per delegation. The maximum transaction limit is set at Rs 5,000 for the full delegation option, says NPCI. For partial delegation, the existing UPI limit will apply, according to NPCI. Jain adds, “In this type of payment, the primary account holder can set a transaction limit for the secondary user, ensuring effective control and secure access to their bank accounts.”

UPI apps and payment service providers offer separate user journeys for primary and secondary users. Users will have the option to choose their UPI apps.

How can a primary user add a secondary user through UPI Circle’s Delegate Payments feature?

“For linking, the primary user will have to scan the QR code and enter the UPI ID followed by selecting contact numbers from the contact list. In the subsequent phase, the primary user will be able to link with the secondary user instead of scanning the QR code by selecting only the contact number from the contact list and the details will be notified to the primary user. Manual entry of mobile number will be restricted,” NPCI said.

A primary user can delegate up to five secondary users and secondary users can accept delegation from a single primary user, NPCI says.

Thakur also explains the flow of the UPI delegate payments process.

Delegate Account Setup: The primary account holder uses a UPI app to select a secondary user (delegate) and grants them access to make payments on their behalf. This can be done by specifying full delegation, where the delegate has full control, or partial delegation, where certain limitations apply.

Start a transaction: The secondary user receives a notification to accept the delegation. Once accepted, the user can select the payment type and initiate the transaction through the app.

Transaction Authorization: The transaction is processed using the primary user’s bank account. If the secondary user has been granted full delegation, the transaction is automatically completed and the primary user receives a notification. In the case of partial delegation, the primary account holder must authorize the transaction request before the payment is processed.

Payment confirmation: Upon completion, the secondary user receives a confirmation of the transaction. This transaction is recorded and can be accessed by both the primary and secondary users for their records.

“Members shall ensure that the primary user has access to the control boundaries so that they can set usage controls on their secondary users. Members shall ensure that the primary user has visibility into transactions made by the secondary user, for both full and partial delegation,” NPCI states.

How will UPI delegated payment benefit users?

Thakur of NPST says, “UPI delegated payments offer significant benefits by bridging the gap between banked and unbanked users. In households where only one member of the family has a bank account, this feature offers a convenient way for unbanked members to make digital transactions, thereby reducing their dependence on cash. In urban settings, delegated payments allow parents to exercise parental control over expenses, giving them greater oversight and helping them manage finances more effectively. Additionally, this feature is useful in situations such as delegating administrative staff to take care of petty expenses.”

Rajan explains, “UPI delegated payments will enhance customer convenience and financial inclusion. For families, it allows dependents such as minors or elderly parents to manage expenses without having to have separate accounts. Employees can be empowered to handle business transactions under the supervision of their employers.”

Spice Money’s Modi said, “UPI delegated payments have the potential to be a transformative tool for millions of Indians, especially those living in rural areas. In many rural households, access to banking services is limited and management of finances often falls on a single family member. With UPI’s delegated payment feature, an elderly parent who finds it difficult to operate a smartphone can delegate payment duties to a younger, tech-savvy family member. A farmer in a village can authorise his spouse or elder child to make essential purchases or payments on his behalf through UPI, without the need for a separate bank account. This could include purchasing farm inputs like fertilisers or seeds, buying daily essentials from the local market or paying school fees.”

UPI Delegate Payments: Amidst rising UPI scams, strong security measures must be put in place

To address the growing concern over UPI scams, strong security measures must be put in place to protect UPI delegate payments. NPST’s Thakur says, “Every delegation request that comes to the bank is subject to a two-factor authentication process, ensuring that only the account holder can authorize the transaction. Additionally, customers can set transaction limits, which helps prevent unauthorized usage by controlling how much can be spent per delegate. To further strengthen security, primary account holders receive a real-time notification of every transaction, allowing them to quickly spot and report any suspicious activity.”

Sheetal of Bank of Baroda says, “Necessary UPI security protocols like mandate approval, mandate revocation option, transaction limit, speed rules, etc. will be implemented and adhered to.”

Sampad Swain, Co-Founder and CEO, Instamojo, says, “To reduce scams on UPI delegated payments, users should set transaction limits and enable real-time notifications for delegated transactions. Additional security is provided through two-factor authentication and secure PINs, simultaneously educating users about potential frauds related to digital transactions so that they remain vigilant at all times. It is crucial to remember that to receive money, there is no need to share the PIN or OTP. Many scams occur because users share these details by mistake, leading to loss of funds. Educating users about these security measures and using fraud detection systems will provide further protection against fraudulent activities.”