What is Paytm’s Pocket Money? New feature lets teens use UPI without bank account – Firstpost

Digital payments firm Paytm launched a new feature called Pocket Money, allowing teenagers to make UPI payments without having their own bank account, while keeping parental supervision built into the system. The system is designed to replicate traditional pocket money in a digital format, but with real-time visibility and programmable restrictions.

The feature is built on the UPI Circle framework developed by the National Payments Corporation of India, which runs India’s UPI infrastructure. UPI Circle allows a primary account holder to extend controlled payment access to another user under defined rules. Paytm has adapted this framework to create a teenager-focused payment access layer within its app.

How the system works

Under the Pocket Money feature, a parent or trusted family member first initiates the setup through the Paytm app. The parent invites the teenager using their contact details and links them through the UPI Circle framework. Once the teenager accepts the invitation and verification is completed, the account becomes active for usage.

Unlike standard UPI users, the teenager does not need to open or independently operate a bank account. Instead, they receive controlled UPI access tied to the parent’s financial setup, allowing them to make digital payments at any merchant that accepts UPI.

From a user experience standpoint, the teenager can transact in the same way as any other UPI user, scanning QR codes or using UPI IDs. However, all activity is governed by limits and permissions set by the parent.

What teenagers can use it for

Paytm has positioned the feature as a way to digitise everyday allowance-based spending. Teenagers can use it for routine, low-value transactions such as transport fares, school or college canteen payments, mobile recharges, grocery purchases and small retail expenses.

The intention is to reduce reliance on cash allowances while also familiarising younger users with digital payments in a controlled environment. By doing so, Paytm is effectively introducing financial behaviour tracking and digital transaction habits at an earlier stage of user life.

Parental control at centre

The most important element of Pocket Money is the level of control it gives parents or guardians. They are not just initiators of the setup but remain continuous overseers of the account.

Parents can set monthly spending limits that define the maximum amount a teenager can use. They can monitor transactions in real time, meaning every payment made by the teenager is visible as it happens. The system also provides spending summaries that categorise transactions, allowing families to track patterns such as transport spending, food expenses or retail purchases.

In addition to monitoring, parents retain the ability to modify spending limits, pause access or revoke permissions entirely at any time. This ensures that while teenagers have operational independence, financial control remains with the guardian.

Safety mechanisms and usage restrictions

Paytm has incorporated multiple safeguards into the feature to align with UPI’s security standards and to reduce misuse risk. These include caps on individual transaction values, monthly spending ceilings and stricter limits during the initial phase of usage to ensure gradual adoption.

Device verification is required to ensure that payments are made only from authorised devices. In addition, every transaction must be authenticated using a UPI PIN, maintaining consistency with the broader UPI ecosystem’s security framework.

The system is designed to balance accessibility with controlled usage, particularly given that the target users are minors who may be new to digital financial systems.

How to activate Pocket Money

The activation process is fully integrated into the Paytm app and requires participation from both the parent and the teenager. The parent must first update the app and navigate to the “To Mobile / Contact” section, where the Pocket Money option is available.

From there, the parent selects the feature, enters or chooses the teenager’s contact details, and proceeds through verification steps. They then set a monthly spending limit, link the relevant bank account, and authorise the setup using a UPI PIN.

Once the parent completes the setup, the teenager receives an invitation within the app. The feature becomes active only after the teenager accepts it, ensuring mutual consent in the onboarding process.