Paytm Launches Pocket Money Feature for Teenagers

Paytm has introduced the Pocket Money feature, which empowers teenagers to conduct UPI payments without needing their own bank account. This feature operates on NPCI’s UPI Circle framework and allows parents or guardians to grant limited spending access to teens via the Paytm app.

As per the company, teenagers can utilise this functionality for payments including school and college canteen purchases, metro journeys, taxi fares, mobile recharges, and shopping expenses. Parents can establish monthly spending caps and watch over transactions in real-time.

Transaction Limits and Features

With this service, individual transaction limits are set at Rs 5,000, while the cumulative monthly limit is capped at Rs 15,000 across the UPI network. It is accessible via savings and current accounts, although international payments and cash withdrawals are prohibited.

Teenage Independence in Payments

Teenagers can carry out payments on their own devices without the need for access to their parents’ gadgets, OTPs, or QR code sharing through messaging applications.

Paytm has seamlessly linked this feature to its Spend Summary tool, which categorises transactions, assisting families in monitoring spending habits and managing allowances.

Security Measures

This feature incorporates security controls, including a Rs 500 transaction limit for the initial 30 minutes post-setup and a Rs 5,000 limit during the first 24 hours. A device lock is obligatory, and parents have the option to adjust spending limits or withdraw access at any time using their Paytm UPI PIN.

The feature is available in the latest version of the Paytm app for both Android and iOS platforms.

Competitive Landscape

Other youth-oriented fintech startups, such as FamPay (now known as Fam), Walrus, and Junio, have previously launched supervised spending solutions for minors using prepaid cards and wallets. Nevertheless, competitors like FamPay, Akudo, and Muvin faced challenges after the RBI restricted co-branded PPI-based UPI arrangements for fintech companies lacking their own PPI licences. In contrast, Paytm’s new feature is fundamentally based on NPCI’s UPI Circle framework, facilitating delegated UPI payments without the necessity for teenagers to open bank accounts.