New Delhi | The government on Wednesday approved a Rs 1,500 crore incentive for the promotion of small-value BHIM-UPI (P2M) transactions up to Rs 2,000, a move aimed at benefiting common people and small merchants.
The 'Incentive Scheme for promotion of low-value BHIM-UPI transactions Person to Merchant (P2M)' for the financial year 2024-25 was approved by the Cabinet chaired by Prime Minister Narendra Modi, Information and Broadcasting Minister Ashwini Vaishnaw told reporters here.
In a post on social media platform X, the Prime Minister said, "The incentive scheme on promoting low-value UPI transactions, which has been approved by the Cabinet today will encourage digital payments and further 'Ease of Living'''.
The scheme will cover 55 per cent of the total merchant transactions, an official release said.
An incentive at the rate of 0.15 per cent per transaction value will be provided for transactions up to Rs 2,000 pertaining to the category of small merchants. For all the quarters of the scheme, 80 per cent of the admitted claim amount by the acquiring banks will be disbursed without any conditions.
The reimbursement of the remaining 20 per cent of the admitted claim amount for each quarter will be contingent upon the fulfilment of certain conditions.
The incentive will enable small merchants to avail of UPI services at no additional cost.
"As small merchants are price-sensitive, incentives would encourage them to accept UPI payment," the release said.
The promotion of digital payments is an integral part of the government's strategy for financial inclusion and provides wide-ranging payment options to the common man.
Vaishnaw also informed that UPI services are also available in Singapore, France, UAE, Sri Lanka, Bhutan, Nepal and Mauritius.
UPI - Unified Payments Interface - is an instant real-time payment system developed by NPCI to facilitate inter-bank transactions through mobile phones.
During the last financial year, incentive payouts by the government for BHIM-UPI were Rs 3,268 crore.
The incentive is paid by the government to the acquiring bank (Merchant's bank) and thereafter shared among other stakeholders: Issuer Bank (Customer's Bank), Payment Service Provider Bank (facilitates onboarding of customers on UPI app / API integrations) and App Providers (TPAPs).
As per the RBI, MDR up to 0.90 per cent of transaction value is applicable across all card networks (for Debit cards).
According to NPCI, MDR up to 0.30 per cent of transaction value is applicable for UPI P2M transactions. Since January 2020, to promote digital transactions, MDR was made zero for RuPay Debit Cards and BHIM-UPI transactions through amendments in section 10A in the Payments and Settlement Systems Act, 2007 and section 269SU of the Income-tax Act, 1961.
New Delhi | Prime Minister Narendra Modi said on Wednesday that the incentive scheme for promoting low-value UPI transactions, which was approved by the Union Cabinet, will encourage digital payments and further improve "ease of living".
Reacting to a host of decisions taken by the Cabinet on Wednesday, he said the approval of construction of six-lane access controlled 29.219-km greenfield highway starting from JNPA Port (Pagote) to Chowk in Maharashtra is in line with the vision of PM Gatishakti and ensuring quicker connectivity to and from ports.
"This project will add momentum to the growth of the regions around Mumbai and Pune," Modi said in a post on X, lauding it as an important infrastructure project.
In another post, he said, "The Cabinet’s approval for a new Brownfield Ammonia-Urea Complex at BVFCL, Namrup, Assam will enhance domestic urea production, benefit farmers in the Northeast & Eastern India and create new employment opportunities."
It will also strengthen the vision of an Aatmanirbhar Bharat by ensuring fertilizer security and promoting energy-efficient production, he added.
On the Cabinet's decision relating to the Rashtriya Gokul Mission (RGM), he said it will boost milk production, improve indigenous breeds and empower several dairy farmers. It is a major effort towards self-reliance in the livestock sector, he added.
The Union Cabinet headed by Modi on Wednesday approved an incentive scheme worth approximately Rs 1,500 crore to promote UPI transactions below Rs 2,000 for 2024-25, an official statement said.
Under the scheme, the government will bear MDR (Merchant Discount Rate) expense for payment of less than Rs 2,000 made by a person to a merchant.