The rise of digital payments has revolutionized financial transactions, offering convenience and efficiency. Now, this digital wave is extending to children, with the introduction of UPI Circle, aimed at empowering them with digital payment capabilities and fostering financial literacy.

UPI Circle is a feature available on apps like Google Pay and BHIM, that allows a primary user (typically a parent) to link their bank account and authorize a secondary user (their child) to make payments. This can be done with certain transaction limits or subject to the parent's approval. Once set up, the child can scan QR codes and send money through the parent's UPI ID, without having access to the parent's bank account or UPI PIN. Parents can set daily or monthly limits or opt to approve each transaction individually. NPCI has set a maximum monthly limit at Rs 15,000 where a single transaction cannot exceed Rs 5,000.

Benefits of UPI Circle for Kids:

• Financial Inclusion: UPI Circle enables digital payments for children, even those without a bank account, by allowing them to transact through a trusted family member.
• Early Financial Literacy: By using UPI Circle, children can learn about digital payments and money management from a young age, preparing them for a cashless future.
• Convenience and Flexibility: UPI Circle eliminates the need for children to carry cash, reducing the risk of theft or loss. It also provides parents with a convenient way to manage their children's expenses.
• Parental Control and Oversight: Parents retain control over their child's spending by setting transaction limits or approving each transaction. They can also monitor their child's spending habits and provide guidance.
• Reduced Bullying: A cashless environment reduces the risk of school pupils being bullied.

Setting up UPI Circle:

The setup process is simple and straightforward:

1. Open Google Pay or BHIM app and click on your profile picture.
2. Scroll down and select UPI Circle.
3. Click on UPI Circle and choose 'Add Family or Friends' to add members.
4. Enter their UPI ID or scan their UPI Circle QR code.
5. Choose between 'spend with limits' (for transactions within a set limit) or 'approve every payment' (requiring your approval for each transaction).
6. Enter your UPI PIN to add the secondary user.

UPI for Minors with Bank Accounts:

While UPI Circle is ideal for children under 15 or those without a bank account, minors aged 15 or older with their own bank account can register for a UPI ID. Several banks allow minors as young as 10 to set up bank accounts, though parental documentation like a PAN card is typically required. Once the UPI ID is active, most apps allow them to send and receive payments independently, often with daily limits up to Rs 1 lakh, depending on the bank. However, many parents still prefer to use UPI Circle even with older teens, as it offers a layer of oversight without entirely restricting digital access.

Financial Literacy Apps and Tools:

In addition to UPI Circle, several financial literacy apps and tools can help children learn about money management. These apps offer features such as:

• Digital budgeting tools.
• Interactive games and quizzes.
• Chore tracking and allowance management.
• Real-time updates on spending activities.
• Educational content on earning, saving, spending, and investing.
• Goal-setting and progress tracking.

Examples of such apps include FamPay, Akudo, Junio, Greenlight Kids, and Revolut <18.

RBI Guidelines for Minor Accounts:

The Reserve Bank of India (RBI) has framed several rules for opening and operating minor accounts to ensure a harmonious cash flow. Key guidelines include:

• Minors of any age can open a savings or term deposit account through a natural or legal guardian.
• Children aged 10 and above can independently operate their accounts, subject to limits and terms defined by the bank.
• Banks may offer digital services to minors based on internal risk policies.
• Accounts operated by minors cannot be overdrawn and must always maintain a credit balance.

Conclusion:

UPI Circle represents a significant step towards empowering children with digital payment capabilities and fostering financial literacy. By providing a safe and controlled environment for children to learn about money management, UPI Circle and other financial literacy tools can help them develop essential skills for a financially secure future.