New Delhi: In its continuing effort to promote UPI transactions and reduce dependency on cash, the Union Cabinet, on Wednesday, approved a Rs 1,500 incentive scheme for FY2024-25. Under this scheme, merchants will receive an incentive of 0.15% per transaction upto Rs 2,000.
When converted to numbers, it would mean that a small merchant with an average UPI sales turnover of Rs 4-5 lakh per month, can expect to earn an annual incentive of Rs 700-900. May not sound too much, till one considers that this is a bonus, earned without any additional effort.
The government believes that this will scheme will prompt small merchants to go in for more Person to Merchant (P2M) UPI transactions. It will also help in increasing the number of India’s BHIM-UPI users in the market. The government also wishes to achieve its target of Rs 20,000 crore transaction through BHIM-UPI alone for the financial year.
The scheme will not be available for large merchants or for transactions above Rs 2,000.
UPI transactions continue to surge, with January 2025 recording nearly 1,700 crore transactions valued at over Rs 23.48 lakh crore. This is the highest monthly figure ever.
To ensure seamless implementation, 80% of the incentive claims submitted by acquiring banks will be reimbursed upfront. The remaining 20% will be disbursed only if banks meet performance benchmarks, including maintaining a technical decline rate below 0.75% and ensuring system uptime above 99.5%.
The government also aims to use the initiative to expand UPI’s reach in smaller towns and rural areas by promoting feature phone-based UPI 123PAY and offline payment solutions like UPI Lite and UPI LiteX.
