For the financial year 2024-25, the Union Cabinet on March 19 approved an ‘incentive scheme’ for the promotion of low-value Bharat Interface For Money - Payments Interface (BHIM-UPI) transactions, according to a recent media report.
The government, in an official release, stated that an incentive of 0.15 per cent per transaction value will be provided for transactions up to Rs 2,000 under the small merchant category
For the financial year 2024-25, the Union Cabinet on March 19 approved an ‘incentive scheme’ for the promotion of low-value Bharat Interface For Money - Payments Interface (BHIM-UPI) transactions, according to a recent media report.
Ashwini Vaishnaw, Union Minister, said in a press meeting post the Cabinet meeting, that the incentive scheme for the promotion of low-value BHIM-UPI transactions (P2M) will be implemented at an estimated outlay of Rs 1500 crore.
For transactions up to Rs 2,000 linked to the category of small merchants, the incentive would be provided at a rate of 0.15 per cent per transaction value, according to a recent official release by the government.
Around 80 per cent of the admitted claim amount by the acquiring banks will be disbursed without any conditions, for all the quarters of the scheme. For each quarter, the reimbursement of the remaining 20 per cent of the admitted claim amount will be based on the following conditions:
1) Only when the technical decline of the acquiring bank is less than 0.75 per cent, 10 per cent of the admitted claim be provided; and
2) Only when the system uptime of the acquiring bank is greater than 99.5 per cent, the remaining 10 per cent of the admitted claim will be provided.
Through digital footprints, the move will ensure secure, convenient, faster cash flow and enhanced access to credit. Common citizens will gain from seamless payment facilities with no extra charges.
The incentive scheme will allow small merchants to avail of UPI services at no extra cost. As small businessmen are price-conscious, rewards would encourage them to accept UPI payments.
Formalizing and accounting the transaction in digital form supports the government’s vision of a cashless economy.
According to the release, around 20 per cent incentive is based on banks maintaining high system uptime and low technical decline. This would ensure round-the-clock availability of payment services. This would also ensure a wise balance between the growth of UPI transactions and the minimum financial burden on the government exchequer.
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