RBI Grants In-Principal Nod For UPI-Linked Wallet For Children

The Reserve Bank of India (RBI) has granted in-principle approval to Junio Payments for the issuance of prepaid payment instruments (PPIs). This will allow Junio Payments to launch Unified Payments Interface (UPI)-linked digital wallets for children and teenagers without opening bank accounts. 

How The Wallet Will Work

The Junio wallet will work as a prepaid instrument linked to UPI. It will not be directly linked to any bank account. Instead, the funds loaded by parents or guardians will be stored in this wallet, allowing the child to use the balance for making UPI payments at a merchant outlet by scanning a QR code or through a merchant application.

According to Junio's website, the wallet also comes with a RuPay card which can be used online and offline, but all spending will be restricted within limits defined by the parent. The website says that a parent can transfer money to the child's wallet, decide how much can be spent, and get instant updates for every transaction. If the card gets lost by the child or any unauthorised activity happens, the parent can immediately freeze or block the account through the app.

It is built on the lines of the prepaid instrument framework designed by RBI. On wallets with minimum KYC, the amount that can be loaded at one time is a maximum of Rs 10,000. For full KYC wallets, the balance limit increases to Rs 3 lakh, as stated in Junio’s terms of service. These limits are set under RBI’s guidelines for semi-closed PPIs.

Parental Controls And Terms

Parental control is central to how the Junio system works. The parents or guardians are the primary accountholders. The children have a sub-wallet under the parent profile. The parent can set daily, weekly, or monthly spending limits at any time and also view transaction history. Notifications are sent for every single transaction that's made on the child's card or wallet.

Additional information on the website indicates that Junio's services would only be available within India and that all transactions must be done in Indian currency. The wallet can be used for making payments towards merchants that accept UPI or RuPay, but cash withdrawal from the prepaid balance is not allowed.

Link With UPI Circle

Conceptually, the way Junio's wallet works is not very different from the UPI Circle framework that was introduced by the National Payments Corporation of India (NPCI). For instance, under UPI Circle, a primary user, such as a parent, may grant permission to another user, say a family member, to perform transactions on their behalf. In both the systems, the primary user retains the right to define the limits of transactions and to monitor them. The former operates directly via a bank account, while the latter involves a prepaid wallet setup under the RBI's PPI framework.

This means that while children cannot operate bank accounts, they can be part of UPI-based payments through an adult-supervised and controlled system.