The governor of the Reserve Bank of India (RBI) has recently introduced UPI Circle, a new feature within the Unified Payments Interface (UPI) system. UPI Circle allows a primary user to grant authorization to a secondary user to make UPI transactions from the primary user’s bank account, with predetermined transaction limits.
In a press release dated August 28, 2024, the National Payments Corporation of India (NPCI) stated that the introduction of UPI Circle aims to enhance the inclusivity, security, and efficiency of India’s digital payment network.
The NPCI further explained that approximately 6% of UPI users currently conduct multiple transactions, often on behalf of others. UPI Circle is designed to offer the primary user greater convenience in delegating payments while maintaining control over the process.
This new functionality provides a payment option for individuals who may be reluctant to use UPI for various reasons, such as concerns about digital payments or lack of enabling infrastructure. Examples include parents providing expenses to their college-going children, senior citizens who are cautious about digital transactions, busy individuals delegating household expenses, and business owners managing petty cash disbursements to their staff.
With UPI Circle, a primary user can grant a trusted secondary user the authority to initiate and complete UPI transactions within specified spending limits, known as full delegation. Each delegation under full delegation is limited to a maximum of Rs 15,000 per month and a maximum of Rs 5000 per transaction.
Alternatively, in the case of partial delegation, the primary user authorizes the initiation of payment requests from secondary users, and then completes the UPI transaction with the UPI Pin. A primary user can delegate to up to 5 secondary users, and a secondary user can accept delegation from only one primary user. The existing UPI limits shall be applicable in the case of partial delegation.
A primary user is an UPI user who delegates the UPI authentication to make payments to a secondary user, while the secondary user is an individual who performs UPI payments with appropriate authorization from the primary user.