UPI incentive scheme: The scheme goals to advertise low-value BHIM-UPI transactions which might be carried out at an estimated value of Rs 1,500 crore. Solely the UPI transactions as much as Rs 2,000 for small retailers are lined beneath the scheme.
UPI incentive scheme: In a transfer aimed toward empowering small retailers and easing digital funds for on a regular basis customers, the central authorities has cleared a Rs 1,500 crore incentive scheme to advertise small-value BHIM-UPI transactions as much as Rs 2,000. The initiative, titled ‘Incentive Scheme for Promotion of Low-Worth BHIM-UPI Transactions Particular person to Service provider (P2M)’ for the monetary 12 months 2024-25, was authorized by the Cupboard chaired by Prime Minister Narendra Modi. Notably, Unified Funds Interface (UPI) is an instantaneous real-time cost system developed by NPCI to facilitate inter-bank transactions by way of cellphones.
As per an official launch, the scheme is anticipated to cowl almost 55% of whole service provider transactions. Small retailers will profit immediately, with incentives offered on the charge of 0.15% of the transaction worth for every eligible cost under Rs 2,000. The construction of the scheme ensures that buying banks obtain 80% of the admitted declare quantity each quarter with out circumstances. The remaining 20% might be reimbursed upon assembly sure predefined standards. This framework is designed to encourage wider adoption of UPI amongst small companies by making digital transactions cost-free for them.
Goal of the scheme
The first aim of the newly authorized incentive scheme is to bolster using the homegrown BHIM-UPI digital cost platform throughout the nation. With an formidable goal of attaining a cumulative UPI transaction worth of Rs 20,000 crore by the top of the monetary 12 months 2024-25, the initiative underscores the federal government’s dedication to deepening the digital economic system.
Since 2020, the Centre has taken important steps to advertise digital funds by waiving the Service provider Low cost Charge (MDR) on transactions carried out by way of RuPay debit playing cards and the BHIM-UPI platform. These coverage measures have been complemented by direct monetary incentives—over Rs 7,000 crore disbursed to banks and cost service suppliers over the previous three years—to speed up the adoption of digital transactions.
The scheme additionally goals to help all members within the cost ecosystem by serving to them construct a sturdy, secure, and inclusive digital cost infrastructure. A key focus of the initiative is increasing UPI’s footprint into tier 3 to tier 6 cities, particularly in rural and distant areas. This growth might be aided by modern options resembling UPI 123PAY for characteristic telephones and offline cost instruments like UPI Lite and UPI LiteX with the intention to be certain that digital cost entry reaches the final mile.
Advantages of the scheme
The scheme brings some key advantages aimed toward accelerating the adoption of digital funds whereas supporting small retailers and most people. By providing handy, safe, and cost-free cost choices, the scheme enhances the general digital transaction expertise for customers and ensures sooner money circulation and improved credit score entry by way of a stronger digital footprint.
For customers, the scheme ensures seamless UPI-based funds with none extra prices. On the similar time, small retailers can now use UPI providers with out bearing further operational prices. The monetary incentives offered are anticipated to encourage wider adoption amongst these companies, lots of whom are nonetheless depending on money transactions.
This initiative additionally aligns with the federal government’s broader imaginative and prescient of selling a cashless economic system by making certain better transparency by way of digitally recorded transactions. Operational effectivity is one other key focus—banks are required to take care of excessive system uptime and decrease technical failures to qualify for the complete 20% performance-linked incentive. This ensures that digital cost providers stay persistently obtainable to the general public.
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