NPCI’s UPI Circle: A New Era of Digital Payments Accessibility

The National Payments Corporation of India (NPCI) has taken a significant step towards enhancing financial inclusivity by launching a groundbreaking feature called UPI Circle. Formally approved on August 3, 2023, UPI Circle represents a paradigm shift in digital payments, allowing primary UPI account holders to delegate payment responsibilities to trusted secondary users.

Empowering the Underserved with UPI Circle

At its core, UPI Circle is designed to bridge the gap for individuals who, due to various circumstances, may not have direct control over their financial resources yet require the ability to make digital payments. By enabling primary users to link their UPI accounts with secondary users, this innovative feature grants the latter the power to conduct transactions on behalf of the former.

Navigating Delegation: Two Distinct Paths

UPI Circle offers two distinct delegation options, each catering to varying degrees of control and convenience:

• Full Delegation: In this scenario, the primary user bestows upon the secondary user complete autonomy to initiate and finalize transactions, albeit within pre-defined spending limits. This eliminates the need for constant approvals, streamlining the payment process for routine expenses.
• Partial Delegation: Here, the secondary user can initiate transactions, but the final authorization rests with the primary user. This requires the primary user to authenticate and approve each payment using their UPI PIN, providing an added layer of security and control, especially for high-value transactions.

Safeguarding the UPI Circle Experience

NPCI has put in place a robust set of guidelines to ensure a secure and user-friendly experience for both primary and secondary users:

• Independent User Journeys: UPI apps and Payment Service Providers (PSPs) are mandated to offer separate, personalized user journeys for primary and secondary users, allowing them to maintain individual preferences and exercise independent control over their respective experiences.
• Mandatory Security Protocols: All secondary users are required to employ either passcodes or biometric authentication, such as fingerprint or facial recognition, to safeguard transactions. This ensures that only authorized individuals can initiate payments on behalf of the primary user.
• Streamlined Linking Process: The process of linking primary and secondary users is designed to be simple and secure. Initially, primary users can link secondary users either by scanning a QR code or entering the secondary user’s UPI ID, followed by selecting the secondary user’s contact from their phone. In the future, the process will be further refined to rely solely on contact selection, thereby eliminating the need for manual entry of mobile numbers and enhancing security.
• Delegation Limits: To maintain clarity and prevent any potential misuse, a primary user can delegate payment authority to a maximum of five secondary users. Similarly, a secondary user can only accept delegation from one primary user, ensuring a clear and unambiguous relationship between the two parties.

Unlocking Financial Inclusion

UPI Circle’s potential impact extends far beyond mere convenience; it has the power to transform lives by unlocking financial inclusion for a vast segment of the population. This feature is poised to empower individuals who may face challenges in managing their finances independently, such as:

• Elderly individuals: Who might find it difficult to navigate the complexities of digital payments.
• Individuals with disabilities: Who might require assistance in conducting financial transactions.
• Minors: Whose access to financial services is often limited.
• Individuals in remote areas: With limited or no access to traditional banking infrastructure.

By enabling these individuals to participate in the digital economy, UPI Circle is not only fostering financial independence but also contributing to a more inclusive and equitable society.

UPI Circle stands as a testament to NPCI’s commitment to innovation and financial inclusion. By empowering primary users to delegate payment responsibilities to trusted secondary users, UPI Circle opens up a world of possibilities for those who have been traditionally underserved by the financial system. As this feature gains traction, we can anticipate a significant boost in digital payments adoption, particularly among vulnerable populations, further propelling India’s journey towards a cashless economy.