UPI rules: RBI says existing users can allow those without UPI accounts to pay via their accounts. Details here (2024)

The Reserve Bank of India (RBI) has announced the introduction of a new initiative called the Delegated Payments facility for Unified Payments Interface (UPI). This feature allows a primary user to grant authorisation to another individual to make UPI payments from the primary user's bank account, within a specified limit. Notably, the secondary user does not require a separate bank account linked to UPI to facilitate these transactions.

"Delegated Payments would allow an individual (primary user) to set a UPI transaction limit for another individual (secondary user) on the primary user’s bank account. This product is expected to add to the reach and usage of digital payments across the country. Detailed instructions will be issued shortly," the central bank said in its monetary policy decision.

The UPI, which has a user base of 424 million, can further expand its user base by adopting delegated payments.

"Allowing Delegated Payments can be a pivotal step in expanding the userbase of Unified Payments Interface (UPI). Through this development, two family members can now use one bank account for making UPI payments. While we wait for more details, this initiative will further strengthen and enhance UPI payments especially in rural areas, where financial literacy is less, and one bank account is used by one family. This mechanism will enhance user convenience by ensuring effective control through the usage limit authorization feature. This will also empower consumer confidence with easy, safe, and hassle-free financial transactions, thereby contributing towards a digitally empowered nation," said Rahul Jain – CFO, NTT DATA Payment Services India.

"We are excited about the proposal to introduce 'Delegated Payments' in UPI. This innovative feature, which allows a primary user to authorize another individual, such as a family member, to make UPI transactions from their bank account up to a specified limit will significantly enhance the convenience and inclusivity of digital payments. Importantly, the secondary user will not need to have a separate bank account linked to UPI, simplifying the process and enhancing ease of use. The potential impact of this development is particularly significant for rural communities where access to banking facilities can be limited. Families often share financial responsibilities, and this new feature will help them manage their finances more efficiently. For instance, a primary user can allow a family member to make necessary transactions without the need for additional banking accounts or complex procedures. This not only simplifies the process but also ensures that more people can participate in the digital economy," said Dilip Modi, Founder & CEO of Spice Money.

In July, the Unified Payments Interface (UPI) witnessed a significant 45% annual growth in payments, as per data from the National Payments Corporation of India (NPCI). The total value of transactions also experienced a notable increase of over 35%, reaching a total of Rs 20.64 lakh crore. This milestone represents the third consecutive month in which the total transactions surpassed Rs 20 lakh crore. Notably, in June 2024, the total value of UPI transactions stood at Rs 20.07 lakh crore, whereas in May it was recorded at Rs 20.44 lakh crore.

In July 2024, according to NPCI data, the average daily transaction value through UPI was Rs 466 million, approximately amounting to Rs 66,590 crore. The volume of UPI transactions increased by 3.95% in July compared to June, and the value of transactions grew by 2.84%. Within the first four months of the current fiscal year (2024-25), UPI registered transactions totaling Rs 80.79 lakh crore through approximately 55.66 billion transactions.

In FY2023-24, the total number of UPI transactions reached 131 billion, reflecting a significant surge from the 84 billion transactions recorded in the previous fiscal year of 2022-23. The Reserve Bank of India's monthly bulletin highlighted a remarkable ten-fold growth trajectory in UPI transactions over the past four years. Starting at 12.5 billion transactions in 2019-20, the volume soared to 131 billion transactions in 2023-24, constituting a substantial 80% share of the total digital payment volumes. Notably, UPI transactions exhibited robust expansion, registering a notable 57% year-on-year increase in FY24.

Within this segment, PhonePe and Google Pay dominated, holding a combined market share of 86%, according to the Boston Consulting Group (BCG) Banking Sector Roundup for 2023-24.

Besides Delegated Payments, the central bank also increased the limit for making tax payments. The transaction limit for UPI is Rs 1 lakh, except for certain categories of payments which have higher transaction limits.

“It has now been decided to enhance the limit for tax payments through UPI from Rs 1 lakh to Rs 5 lakh per transaction. This will further ease tax payments by consumers through UPI,” he added.

Commenting on these developments, Dilip Asbe, managing director and CEO of the National Payments Corporation of India (NPCI), which runs UPI, stated on X, “Never a dull moment for payment systems in India.”