Government approves incentive scheme to promote low-value BHIM-UPI transactions

For the financial year 2024–25, the Union Government has approved the "Incentive Scheme for Promotion of low-value BHIM-UPI transactions Person to Merchant (P2M). From 01.04.2024 to 31.03.2025, the incentive scheme for low-value BHIM-UPI transactions (P2M) will be carried out at an expected cost of 1,500 crore.

The system covers just the UPI (P2M) transactions up to 2,000/-for Small Merchants. For transactions up to Rs. 2,000 related to category of small retailers, the reward at the rate of 0.15% per transaction value would be given. Eighty percent of the admitted claim amount by the acquiring banks will be distributed without any restrictions at every level of the plan.

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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 will be 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%.

Convenient, safe, faster cash flow and improved credit access via digital footprints and will help small businesses to use low-value BHIM-UPI Services at no extra cost. Small retailers are price conscious, hence incentives might help them to take UPI payments.

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Efficiency gain depends on banks keeping high system uptime and low technical degradation; 20% incentive depends on this as well. This will guarantee citizens' constant access to payment services.

The Main Objectives are: Promoting indigenous BHIM-UPI platform and attaining the target of 20,000,000 total transaction volume in FY 2024-25, supporting the payment system participants in building a strong and safe digital payments infrastructure and penetration of UPI in tier 3 to 6 cities, especially in rural & remote areas by promoting innovative products such feature phone based (UPI 123PAY) & offline (UPI Lite/UPI LiteX).

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