Bhim UPI Transaction: Cabinet Approves Rs 2,600 Crore Incentive Scheme To Promote RuPay

Bhim UPI Transaction: Cabinet Approves Rs 2,600 Crore Incentive Scheme To Promote RuPay

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the incentive scheme for the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (person-to-merchant) for a period of one year from April 2022.

The approved scheme for the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions in FY23 has a financial outlay of Rs 2,600 crore. 

According to the PIB press release, under the scheme, acquiring banks will be provided financial incentives, for promoting Point-of-Sale (PoS) and e-commerce transactions using RuPay Debit Cards and low-value BHIM-UPI transactions (P2M) for the current financial year.

The Finance Minister, in her speech on the Budget 2022, announced the government’s intent to continue the financial support for digital payments announced in the previous Budget, with a focus on promoting the use of payment platforms that are economical and user-friendly. 

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In the financial year 2021-22, the government approved an incentive scheme in compliance with the Budget announcement to give a further boost to digital transactions. 

Total digital payments transactions have registered a year-on-year growth of 59 per cent, rising from 5,554 crores in the financial year 2020-21 to 8,840 crore in the financial year 2021-22. BHIM-UPI transactions have registered a year-on-year growth of 106 per cent, rising from 2,233 crore in the financial year 2020-21 to 4,597 crore in the financial year 2021-22, the release said.

Various stakeholders in the digital payments systems and the Reserve Bank of India (RBI) expressed concerns regarding the potential adverse impact of the zero MDR regime on the growth of the digital payments ecosystem. 

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Further, the National Payments Corporation of India (NPCI) requested, among other things, for incentivisation of BHIM-UPI and RuPay Debit Card transactions to create a cost-effective value proposition for ecosystem stakeholders, increase merchant acceptance footprints and faster migration from cash payments to digital payments.

UPI has achieved a record of 782.9 crore digital payment transactions with a value of Rs 12.82 lakh crore in the month of December 2022, the release said.

The government says that this incentive scheme will facilitate the building of a robust digital payment ecosystem and promote RuPay Debit Card and BHIM-UPI digital transactions. 

The scheme will also promote UPI Lite and UPI 123PAY as economical and user-friendly digital payment solutions and enable further deepening of digital payments in the country, across all sectors and segments of the population.