The Government of India has announced an incentive scheme to promote low-value BHIM-UPI (Person to Merchant) transactions for the financial year 2024-25. The initiative aims to further boost the adoption of digital payments across the country, particularly among small merchants. The scheme is designed to support the growing use of Unified Payment Interface (UPI) services, providing a cost-free, seamless transaction experience for common citizens.

Key Features of the Scheme
1. Objective and Scope
- The primary objective of the scheme is to promote the adoption of low-value UPI transactions (up to ₹2,000) by small merchants. The scheme is expected to incentivize banks, payment system operators, and app service providers who facilitate these transactions.
- The scheme will focus on small merchants, with the goal of ensuring they continue to benefit from UPI services, allowing them to operate seamlessly and cost-effectively.
2. Financial Outlay
- The scheme is allocated an estimated budget of ₹1,500 Crore for the implementation period of April 1, 2024, to March 31, 2025.
3. Eligibility and Coverage
- Small Merchants: Only transactions made by small merchants with an annual turnover of up to ₹20 lakh (as defined by RBI) are eligible for the scheme.
- The scheme specifically targets transactions up to ₹2,000.
4. Incentive Structure
- The incentive for promoting these low-value transactions will be 0.15% per transaction for small merchants.
- The disbursement of claims will be made on a quarterly basis, with an 80% immediate disbursement and the remaining 20% contingent upon meeting certain conditions:
- Technical Decline: Less than 0.75% of transaction declines.
- System Uptime: Uptime of acquiring banks to be greater than 99.5%.
5. Review and Adjustments
- The scheme will be periodically reviewed by the Department of Financial Services (DFS) in consultation with the Financial Advisor (DFS) and NPCI. Adjustments to the scheme may be made based on the fund utilization and overall effectiveness of the initiative.
6. Operational Guidelines
- The DFS, in collaboration with NPCI, will issue detailed operational guidelines on the implementation of the scheme, including how incentives will be shared among ecosystem partners.
In Summary
This incentive scheme marks a significant step toward further enhancing digital payments in India, targeting the small merchant sector to ensure they remain active participants in the UPI ecosystem. By incentivizing low-value transactions, the government hopes to increase the usage of digital payments in untapped areas, benefiting both merchants and consumers alike.
The scheme will be a crucial part of the government's larger push to drive cashless transactions and expand the digital economy, setting the stage for a more inclusive financial system across India.