The Union Cabinet on March 19 approved an ‘Incentive Scheme’ for promotion of low-value BHIM-UPI transactions for the financial year 2024-25.
The incentive scheme for promotion of low-value BHIM-UPI transactions (P2M) will be implemented at an estimated outlay of Rs 1,500 crore, Union Minister Ashwini Vaishnaw said in a press briefing after the Cabinet meeting.
The incentive will be provided at the rate of 0.15% per transaction value for transactions up to Rs 2,000 pertaining to the category of small merchants, the government said in an official release.
For all the quarters of the scheme, 80% of the admitted claim amount by the acquiring banks will be disbursed without any conditions. The reimbursement of the remaining 20% of the admitted claim amount for each quarter will be contingent upon fulfilment of the following conditions:
a) 10% of the admitted claim will be provided only when the technical decline of the acquiring bank is less than 0.75%; and
b) The remaining 10% of the admitted claim will be provided only when the system uptime of the acquiring bank will be greater than 99.5%.
Also read: Free UPI transactions for all? Govt may rethink policy for large merchants
The move will ensure convenient, secure, faster cash flow and enhanced access to credit through digital footprints. Common citizens will benefit from seamless payment facilities with no additional charges.
This incentive scheme 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.
It supports the government’s vision of a less-cash economy through formalizing and accounting the transaction in digital form.
The release said that around 20% incentive is contingent upon banks maintaining high system uptime and low technical decline. This will ensure round-the-clock availability of payment services to citizens. Judicious balance of both the growth of UPI transactions and the minimum financial burden on the Government exchequer.
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