The National Payments Corporation of India (NPCI) has yet again added a new feature to the Unified Payments Interface (UPI) platform. The new feature, UPI Circle-Delegate Payments, will help primary holders of UPI accounts to delegate transaction rights to secondary users.
The main goal is to create a common platform that simplifies and enhances transactions between individuals who are familiar with each other but may not necessarily have their own bank accounts. This platform will serve as a means to facilitate seamless and secure financial exchanges among trusted parties such as family members, friends, employees, and acquaintances.
The Reserve Bank of India introduced this facility during its August MPC meeting. The feature would allow the primary user to authorise another individual to make UPI transaction even without a separate UPI-linked bank account.
Shaktikanta Das, Governor, RBI, said the move to allow two people to make payments from the same bank account will further deepen the reach and usage of digital payments.
“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.
1. What is UPI Circle?
The Unified Payments Interface (UPI) Circle-Delegate Payments feature has been strategically developed to provide a seamless solution for two individuals to utilise a shared bank account for conducting UPI transactions.
This functionality proves to be especially beneficial for households wherein only one individual possesses a bank account or in scenarios where several family members manage a joint account.
“UPI Circle-Delegate Payments is a feature where a UPI user acts as a primary to link with their trusted secondary users on their UPI App for either partial or full delegation,” NPCI said in a statement.
2. Purpose
During the UPI Steering Committee meeting held on August 3, 2023, the UPI Circle was officially approved. This feature enables primary users to assign payment responsibilities to designated secondary users whom they trust. The platform claims to guarantee that the main user preserves authority over transaction ceilings and supervision, thereby amplifying user convenience while upholding stringent security measures.
3. How will it work?
On this platform, primary users will have the option to link their UPI accounts with secondary users, providing them with the privilege of conducting payments on their behalf.
This mechanism encompasses two key forms of delegation:
Full Delegation: In this scenario, the primary user bestows upon the secondary user the power to both initiate and execute transactions within specified spending thresholds. The secondary user is not required to seek additional approval to successfully carry out these transactions.
Partial Delegation: Under this arrangement, the secondary user possesses the capability to kickstart transactions, but the primary user is mandated to authenticate and finalise the payment via their UPI PIN. This model ensures heightened oversight for significant transactions while still allowing for flexibility in managing routine payments.
“For linking, the primary user shall scan the QR code/enter UPI ID followed by a selection of contact numbers from the contact list. In the later phase, the primary user shall be able to link the secondary user in lieu of a QR code scan by selecting of contact number from the contact list only, details to be notified. Manual entry of mobile number shall be restricted,” NPCI stated.
It added a primary user can delegate up to five secondary users and secondary users can accept delegation from only one prime user.
“Members shall ensure limits control to be available for the primary user to set usage controls over their secondary users. Members shall ensure that the primary user has visibility of transactions performed by the secondary user for both full and partial delegation,” says NPCI.
4. Key guidelines
Key guidelines laid out by NPCI for UPI apps and Payment Service Providers (PSPs)
In the realm of user experience, both primary and secondary users are set to undergo distinct user journeys within their preferred UPI applications, enabling them to uphold their preferences and exercise control over their transactions.
To bolster security measures, every secondary user is mandated to employ either passcodes or biometric validations like fingerprint or facial recognition to fortify the integrity of all financial transactions.
Regarding the linking process, primary users possess the capability to link secondary users through methods such as scanning a QR code or inputting the secondary user’s UPI ID. This process is further augmented by choosing the secondary user’s contact directly from the primary user’s phone.
Sole contact selection will be permissible while manual insertion of mobile numbers will be restricted, a strategic move aimed at heightening the security framework.
When it comes to delegation limits, a primary user is empowered to bestow payment authorization onto a maximum of five secondary users. Conversely, a secondary user is only eligible to accept delegation from a single primary user, ensuring transparency and averting any potential conflicts arising from overlapping responsibilities.
5. Beneficiaries
The UPI Circle feature can be useful for individuals who may lack the capacity or inclination to oversee their digital transactions, yet still seek to utilise financial services.
UPI delegate payments offer a convenient and inclusive solution for customers, enabling dependents such as minors or elderly parents to manage expenses without the necessity of individual accounts.
Furthermore, employees are granted the ability to conduct business transactions under the supervision of their employers, fostering empowerment and efficiency within the workplace.
“Through this development, two family members can now use one bank account for making UPI payments. This initiative will further strengthen and enhance UPI payments especially in rural areas, where financial literacy is less, and one bank account is used by one family. This mechanism will enhance user convenience by ensuring effective control through the usage limit authorisation feature. This will also empower consumer confidence with easy, safe, and hassle-free financial transactions, thereby contributing towards a digitally empowered nation,” said Rahul Jain – CFO, NTT DATA Payment Services India.