Incentive Scheme for Promotion Of Low-Value BHIM-UPI Transactions (P2M)

Why is in News?

The Union Cabinet recently approved an incentive scheme for promoting low-value BHIM-UPI transactions (P2M) in FY 2024-25, offering a 0.15% incentive on UPI payments up to Rs2,000 for small merchants.

• Aim - To boost digital payments, expand UPI adoption in rural areas, and ensure a robust payment infrastructure.
• Key Highlights of the Scheme - Transaction Limit – Covers only UPI (P2M) transactions up to Rs2,000 for small merchants.
• Incentive Structure
  • Small Merchants - 0.15% incentive per transaction for payments up to Rs2,000.
  • Large Merchants - No incentive for any transaction.
  • Transactions Above Rs2,000 - No incentive for any merchant category.
• Reimbursement Structure
  • 80% of claims by acquiring banks will be disbursed unconditionally.
  • Remaining 20% will be reimbursed upon fulfilling certain conditions.
• Objectives of the Scheme
  • Promote the Indigenous BHIM-UPI Platform
  • Strengthen Digital Payment Infrastructure
  • Ensure System Reliability.
  • Expand UPI in Rural Areas – Increase penetration in tier 3-6 cities via innovative solutions like
    • UPI 123PAY (Feature phone-based payments)
    • UPI Lite & UPI LiteX (Offline payments)

Reference

PIB - Incentive scheme for promotion of low-value BHIM-UPI transactions