Understanding Delegated Payments: Full Control for Companies
India’s digital payments sector has reached a new milestone with the introduction of UPI Circle, a feature launched by the National Payments Corporation of India (NPCI). This innovative tool allows users to delegate UPI transactions securely, enhancing financial inclusivity and simplifying payment management for households and businesses. Currently available on the BHIM app, UPI Circle is set to expand to additional platforms in the near future.
Understanding UPI Circle
UPI Circle is designed to empower a Primary User to authorize a Secondary User to conduct UPI transactions on their behalf, all while adhering to predefined spending limits. The Primary User retains ownership of the bank account, while the Secondary User may or may not have a personal account. This feature is particularly beneficial for individuals who may not be comfortable with digital payments, such as elderly family members, children, or domestic staff. By allowing trusted individuals to make payments, UPI Circle aims to bridge the gap for those currently excluded from the digital payment ecosystem.
The introduction of UPI Circle addresses a significant challenge in India, where many people still rely on cash for daily transactions due to limited digital literacy or lack of access to personal bank accounts. According to NPCI, approximately 6% of UPI users frequently make transactions on behalf of others. UPI Circle formalizes these delegated payments, promoting transparency and reducing cash dependency.
How UPI Circle Operates
The functionality of UPI Circle offers two modes of control for Primary Users. They can choose to approve each transaction individually using their UPI PIN, or they can set predefined spending limits that allow Secondary Users to make payments without needing further authorization. This flexibility is designed to facilitate efficient financial management for families and small businesses while ensuring that Primary Users maintain oversight of their finances.
By enabling users who do not handle their own finances to engage in digital payments securely, UPI Circle promotes greater financial inclusion. This feature is particularly relevant in a country where many individuals still prefer cash transactions. The NPCI emphasizes that UPI Circle is not merely a convenience; it is a strategic move towards creating a more inclusive financial ecosystem that allows more people to participate in digital transactions without sacrificing control or security.
Practical Applications of UPI Circle
UPI Circle has a variety of real-world applications that cater to different user needs. For instance, parents can authorize their children to spend on essentials like stationery or food while keeping track of spending limits. Similarly, elderly users who may be hesitant about using digital payments can allow their children to complete transactions on their behalf, providing a sense of security and oversight.
In busy households, working couples can enable domestic help to purchase necessary items while imposing spending limits to manage household budgets effectively. Business owners, such as those running car rental services, can delegate payment responsibilities to staff for expenses like fuel, ensuring accountability and minimizing the use of petty cash.
The integration of UPI Circle within the BHIM app emphasizes user-friendliness and security. Users can select their preferred level of control, whether through transaction-by-transaction approval or by establishing preset spending limits. This makes UPI Circle an ideal tool for managing joint financial responsibilities and family budgets. As highlighted by Bhimupi.org, UPI Circle represents a significant step towards financial inclusion, allowing non-users to enter the digital payments landscape while enabling experienced users to share financial access securely.
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