PhonePe unveils UPI Circle to extend digital payments to underbanked users

PhonePe has introduced a new feature called 'UPI Circle' to make digital payments more accessible and manageable for families and individuals who may not have direct access to banking services. With UPI Circle, the fintech company is looking forward to onboarding underbanked users into the digital payment ecosystem by allowing shared access to a single UPI-enabled bank account.

UPI Circle enables a primary user to authorize secondary users, typically family members, dependents, or trusted individuals, to make payments using their UPI account. These secondary users do not need their own bank accounts; instead, they can generate individual UPI IDs that are linked to the primary user’s bank account. This allows them to carry out digital transactions independently while staying under the financial oversight of the primary user.

The feature is built around the idea of delegated payments, where the primary account holder can either authorize every transaction made by secondary users (partial delegation) or set predefined spending limits (full delegation).  And, to ensure financial control and security, the primary user can also monitor all transactions, define daily transaction limits, and add or remove users from the circle as needed.

Setting up UPI Circle

PhonePe users can activate UPI Circle directly through the app. Here’s how it works:

1. The primary user needs to turn on UPI Circle in the app settings.
2. Secondary users are invited through a UPI ID or QR code.
3. The invited users must accept the request through their own PhonePe accounts.
4. Once added, secondary users can begin making payments using their UPI ID, with all transactions linked to the primary user’s account.

A step towards inclusive banking

The benefits of UPI Circle are far-reaching. It promotes financial inclusion by allowing individuals without bank accounts, such as children, elderly family members, or household staff, to participate in the digital economy. For families, it simplifies expense management, such as giving allowances or paying for routine expenses, without the need to open and maintain multiple bank accounts. It also offers a convenient way to delegate payment responsibilities for specific purposes while ensuring tight control and transparency.