Highlights of the Scheme

 The Union Cabinet has approved an Incentive Scheme to promote low-value BHIM-UPI transactions (P2M) for the fiscal year 2024-25. This scheme will focus on UPI Person-to-Merchant (P2M) transactions and will be implemented with an allocation of ₹1,500 crore.

Key Highlights of the Scheme:

• Incentive: A 0.15% incentive per transaction will be provided for transactions up to ₹2,000, specifically for small merchants.
• The incentive will be given to the Acquiring Bank (Merchant's Bank) and shared with the Issuer Bank (Customer's Bank), Payment Service Provider Bank, and App Providers.

Objectives:

• To promote the indigenous BHIM-UPI platform.
• To achieve a total transaction volume of ₹20,000 crore in FY 2024-25.
• To expand UPI penetration in Tier 3 to Tier 6 cities, especially in rural and remote areas, by supporting innovative payment solutions such as feature phone-based (UPI 123PAY) and offline (UPI Lite/UPI LiteX) payment methods.

Key Benefits:

• Small merchants can access UPI services at no extra cost.
• In 2020, the Merchant Discount Rate (MDR) was waived for BHIM-UPI transactions.

About BHIM (Bharat Interface for Money) 2016:

• A payment application that facilitates easy transactions using the Unified Payments Interface (UPI).
• UPI integrates multiple bank accounts into a single mobile app (from any participating bank).
• Developed by the National Payments Corporation of India (NPCI) to encourage digital payments.

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