On March 19, the Union Cabinet approved an ‘Incentive Scheme’ to promote low-value BHIM-UPI transactions for the financial year 2024-25.
The scheme will be implemented at an estimated cost of Rs 1,500 crore, as announced by Union Minister Ashwini Vaishnav during a press conference following the cabinet meeting.
Incentives for Small Merchants
The government will offer an incentive of 0.15% per transaction for transactions up to Rs 2,000 for small merchants.
The disbursement process will be carried out over the course of the scheme’s quarters.
Banks will release 80% of the accepted claim amount without conditions. The remaining 20% will be distributed based on two conditions:
1) 10% of the accepted claim will be paid if the acquiring bank’s technical slippage is less than 0.75%.
2) The remaining 10% will be given if the system uptime of the acquiring bank exceeds 99.5%.
This scheme aims to facilitate convenient, secure, and fast cash flow, offering better access to credit for citizens through their digital footprints.
It will provide small merchants with the opportunity to accept UPI payments without incurring additional costs, addressing their financial concerns.
Supporting a Less-Cash Economy
The scheme aligns with the government’s vision of promoting a less-cash economy by encouraging digital transactions.
By rewarding banks for maintaining high uptime and low technical failures, the initiative ensures continuous availability of payment services.
This approach balances the growth of UPI transactions with minimal financial burden on the government.
