UPI Incentive Scheme Extended: The Union Cabinet has made a major decision regarding UPI. On Wednesday, March 19, the government approved an ‘incentive scheme’ aimed at promoting BHIM-UPI transactions with small transactions for the financial year 2024-25. This scheme, which is estimated to cost Rs 1500 crore, will benefit small traders.
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UPI Incentive Scheme Extended
On Wednesday, the central government extended the incentive scheme to promote the Unified Payment Interface (UPI) for one year. The scheme will continue till March 31, 2026, and will cost around Rs 1,500 crore.
This decision was taken in the Union Cabinet. Union Minister Ashwini Vaishnav said that under this scheme, small shopkeepers will get a 0.15% incentive on Person to Merchant (P2M) transactions up to Rs 2,000 through RuPay debit card and BHIM-UPI.
Person to Merchant UPI transaction means UPI transaction is done between merchant and customer. This scheme is effective from 1st April 2021. Promoting the RuPay debit card will have a direct impact on global payment companies Visa and MasterCard.
UPI Incentive Scheme Extended: How will Shopkeepers get Incentives?
The incentives given to shopkeepers can be understood with an example –
- If a customer buys goods worth Rs 2000 and pays through UPI, the shopkeeper will get an incentive of Rs 3. Banks will also get incentives. The government will immediately give 80% of the claim amount to the banks. The banks will get the remaining 20% amount when the technical fault of the bank is less than 0.75%. The system uptime of the bank will be more than 99.5%.
- Under the scheme, the government pays acquiring banks a percentage of the value of transactions made through RuPay and BHIM-UPI systems. Acquiring banks means all banks or financial institutions that process credit or debit card payments for merchants.
UPI Incentive Scheme Extended: Target Of 20,000 Crore Transactions
The government is working to promote digital payments. The Union Minister said that the government’s target is to complete 20,000 crore transactions in the financial year 2025-26. Also, UPI is to be promoted to small towns and villages.
Previously, the merchant discount rate on RuPay debit cards and BHIM-UPI transactions was zero. Now, this new incentive scheme will encourage shopkeepers to accept UPI payments. He said, ‘UPI payment is an easy, safe and fast payment service for shopkeepers. Also, the money comes directly into the bank account without any extra charge.
Aim of the UPI Incentive Scheme
- This scheme aims to Promote the indigenous BHIM-UPI platform.
- The initiative aims to achieve a cumulative UPI transaction value of Rs 20,000 crore by the financial year 2024-25.
- Since 2020, the government has been promoting digital transactions by eliminating the Merchant Discount Rate (MDR) on RuPay debit cards and BHIM-UPI transactions.
- To support payment system participants in developing a robust and secure digital payment infrastructure.
Benefits of this Scheme-
- Provides convenience, security, quick cash flow and better credit access through a digital footprint.
- Provides seamless payment options for the general public without any additional charges.
- Allows small businesses to use UPI services without incurring additional costs. Incentives can motivate them to adopt UPI payments.
- To support the government’s objective of promoting a cashless economy by documenting transactions digitally.
Jay Chavda He is the Founder and Writer of businesspulsecare.com. He is an I.T Engineer, Freelancer, Businessman. He posts Business, Stock/Share Market, Finance Related News and updates on the website. 🔗