On Wednesday, the Union Cabinet announced an incentive scheme totalling ₹1,500 crore for low-value United Payments Interface (UPI) payments during FY 2024-25. This incentive aims to encourage small merchants to adopt digital payment methods, enhancing financial inclusion and reducing cash dependency.
Key Highlights of the Scheme:
- Small merchants conducting person-to-merchant (P2M) transactions up to ₹2,000 will receive an incentive of 0.15% per transaction. This measure ensures that digital payments remain an attractive and cost-free option for small businesses.
- The program is running from April 1, 2024, to March 31, 2025, to achieve a total transaction volume of ₹20,000 crore via the BHIM-UPI platform during this period.
- To ensure efficient implementation, 80% of the incentive claims submitted by acquiring banks will be reimbursed upfront. The remaining 20% will be disbursed based on performance metrics, including maintaining a technical decline rate below 0.75% and ensuring system uptime exceeding 99.5%.
“The incentive scheme for promoting low-value UPI transactions, which was approved by the Cabinet today, will encourage digital payments and further ‘Ease of Living’,” Prime Minister Narendra Modi said on X.
The Indian government is boosting digital payments in order to make the nation cashless. In 2023, 10 billion transactions were recorded. This fund or incentive is one of the parts of its strategies.
