UPI Circle Feature: What could be the biggest change to digital payments in India, the NPCI has devised a feature called UPI Circle, announced recently by the RBI. It would ensure making transactions easier for households and small communities that are existing outside the ambit of formal banking arrangements. In this initiative, people of a circle can make transactions even if they are not having individual bank accounts.
How UPI Circle Works
Earlier, every person needed a bank account and a mobile number to be exclusively linked to them for UPI payments. With UPI Circle, multiple secondary users can have their payments managed by one primary user with a single UPI account. For example, if there are five members in a family, the head of the family can add all other family members in their UPI Circle and thus go on to transact without having them open their own accounts.
Features and Functionality
There are primary and secondary users in UPI Circle. The primary user is the one who has his bank account and can add five secondary users in his UPI circle. The primary user can apply an option for two kinds of delegation:
Full Delegation: In this, the secondary users are allowed to make a payment up to a preset spending limit without seeking any further approval from the primary user.
Partial Delegation: The secondary user can initiate transactions, where each payment needs to be authenticated by the primary user through the entering of his UPI PIN.
Rules and Limitations
The following rules, from the perspective of security and manageability, govern this UPI Circle feature:
User Verification: It is required that in the case of every transaction, details of the secondary user like app passcodes or biometric details be provided.
Limits: In the UPI Circle, the spending limit is ₹ 15,000, while for partial delegation, the spending limit is ₹ 5,000 per day.
Cooling-Off Period: Every transaction that you make through the UPI Circle is cooled off for a period of 24 hours to ensure that there is no continuous expenditure of money.
Monitoring: The primary user can monitor and have control over all transactions made by the secondary users, thus keeping a check and the option of halting payments if necessary.
Benefits and Considerations
UPI Circle is a solution of much-added convenience for management of household finances or making payments to dependants. It helps parents control and manage the spends of children or elderly dependants in the family with least risks of fraudulence and ensuring that budgets are not overshot. It will also help in micro-communities and gig economies where real-time payments are necessary.
Primary users, however, have to be very cautious and ensure that they will pass on their access only to those whom they can trust. Unless proper monitoring and setting of limits are taken care of, it can be misused due to mismanagement or security lapses.
