New Delhi: Union Cabinet has approved a Rs 1,500 crore incentive scheme to promote small-value BHIM-UPI transactions in the financial year 2024-25 and decided to continue the scheme for the next financial year.
The initiative aims to further boost digital payment adoption, particularly among small merchants, by incentivizing transactions of up to Rs 2,000.
Under the scheme, small merchants will receive a 0.15 per cent incentive per transaction, while ensuring that digital payments remain a cost-effective and attractive option for businesses that are traditionally price-sensitive.
The scheme is in effect from 1 April 2024 to 31 March 2025. It showcases the government’s broader efforts to deepen financial inclusion and reduce reliance on cash-based transactions.
However, merchants accepting payments above Rs 2,000 will not be eligible for the incentive.
To facilitate smooth implementation, 80 per cent of the incentive claims submitted by acquiring banks will be reimbursed upfront, while the remaining 20 per cent will be disbursed based on performance benchmarks.
These include maintaining a technical decline rate below 0.75 per cent and ensuring system uptime above 99.5 per cent.
Additionally, the initiative is expected to expand UPI’s reach in smaller towns, as well as rural areas through feature phone-based UPI 123PAY and offline payment solutions like UPI Lite and UPI LiteX.
The government has set an ambitious target of achieving a total transaction volume of Rs 20,000 crore via BHIM-UPI in FY25.
Meanwhile, UPI transactions continue to witness record growth, with January 2025 registering nearly 1,700 crore transactions valued at over Rs 23.48 lakh crore, which is the highest monthly figure recorded so far.
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