The cabinet approves the incitement scheme for the promotion of low value BHIM-UPI transactions (P2M)

The Union's Cabinet chaired by Prime Minister Shri Narendra Modi has approved the “ incentive plan for the promotion of the low value BHIM-UPI (P2M) '' for exercise 2024-25 in the following way:

I. The incitement scheme for the promotion of low-value BHIM-UPI transactions (P2M) will be implemented at an expense estimated at 1,500 crore, from 01.04.2024 to 31.03.2025.

II only UPI transactions (P2M) up to 2,000 / – for small merchants are covered by the regime.

III. Incituration at the rate of 0.15% per transaction value will be provided for transactions up to Rs.2,000 concerning the category of small merchants.

IV. For all quarters of the program, 80% of the amount of the complaint admitted by the acquiring banks will be disbursed without any condition.

v. The reimbursement of the remaining 20% ​​of the amount of the complaint admitted for each quarter will depend on the completion of the following conditions:

a) 10% of the admitted complaint will only be provided when the technical drop in the buying bank is less than 0.75%; And

b) The remaining 10% of the listed complaint will only be provided when the availability of the buying bank system is greater than 99.5%.

Benefits:

I. Practical, secure and faster cash flows and improved access to credit through digital fingerprints.

II common citizens will benefit from transparent payment facilities at no additional cost.

III. Allow small merchants to take advantage of UPI services at no additional cost. As the small merchants are sensitive to prices, the incentives would encourage them to accept the payment of the UPI.

IV. Supports the government's vision of a less monetary economy by formalizing and accounting for the transaction in digital form.

V This will guarantee the 24 -hour availability of payment services to citizens.

VI. A judicious balance of the growth of UPI transactions and the minimum financial burden for the government's treasure.

Objective:

Promotion of the native BHIM-UPI platform. Achieve the goal of 20,000 Create the total volume of transactions during the year 2024-25.

· Support participants in the payment system in the construction of a robust and secure digital payment infrastructure.

· UPI penetration into levels of level 3 to 6, in particular in rural and distant regions by promoting innovative products such as payment solutions based on the phone (UPI 123pay) and offline (UPI Lite / Upi Litex).

Maintain high availability of the system and minimize technical reductions.

Background:

The promotion of digital payments is an integral part of the government's strategy for financial inclusion and offers numerous payment options to ordinary humans. The expenses incurred by the digital payment industry while providing services to its customers / merchants are recovered thanks to the burden of the rate of merchants (MDR).

According to RBI, MDR up to 0.90% of the transaction value is applicable on all card networks. (for debit cards). According to NPCI, MDR up to 0.30% of the transaction value is applicable for the UPI P2M transaction. Since January 2020, to promote digital transactions, MDR has been returned to zero for RuPay debit cards and BHIM-UPI transactions through changes in article 10A in the 2007 law on payment and settlement systems and article 269SU of the 1961 tax income law.

In order to support participants in the payment ecosystem to the effective service of services, “Incituration scheme for the promotion of Rupay debit cards and low value BHIM-UPI transactions (P2M)” has been implemented with the approval due by the firm. The payment of incitement per year by the government (in rs. Core) during the last three years:

The incitement is paid by the government to the buyer bank (merchant bank) and then shared, among other stakeholders: the issuer bank (customer bank), the bank of payment service providers (facilitates customer integration into AP / API integrations) and application suppliers (TPAPs).