Cabinet approves Rs 1,500 crore incentive scheme to promote low-value BHIM-UPI transactions

The Union Cabinet chaired by the Prime Minister Narendra Modi today approved the ‘Incentive Scheme for promotion of low-value BHIM-UPI transactions Person to Merchant (P2M)’ for the financial year 2024-25. The aim is to achieve the target of 20,000 crore total transaction volume in FY 2024-25, via the indigenous BHIM-UPI platform.

The incentive scheme will be implemented at an estimated cost of 1,500 crore from April 1, 2024 to March 31, 2025. Only the UPI (P2M) transactions up to 2,000 for small merchants are covered under the scheme.

The incentive at the rate of 0.15 per cent per transaction value will be provided for transactions up to Rs.2,000 pertaining to the category of small merchants.

"For all the quarters of the scheme, 80 per cent of the admitted claim amount by the acquiring banks will be disbursed without any conditions," according to the Cabinet note.

The reimbursement of the remaining 20 per cent of the admitted claim amount for each quarter will be contingent upon the fulfilment of the following conditions - 0 per cent of the admitted claim will be provided only when the technical decline of the acquiring bank will be less than 0.75 per cent, and the remaining 10 per cent of the admitted claim will be provided only when the system uptime of the acquiring bank will be greater than 99.5 per cent, the Cabinet informed.

Benefits of low-value BHIM-UPI transactions

• It provides convenient, secure, faster cash flow, and enhanced access to credit.
• This will benefit common citizens from seamless payment facilities with no additional charges.
• Enable small merchants to avail of UPI services at no additional cost. As small merchants are price-sensitive, incentives would encourage them to accept UPI payments.
• A judicious balance of both the growth of UPI transactions and the minimum financial burden on the Government exchequer.