India Business Journal - Union Cabinet approves incentive for BHIM-UPI low-value transactions

MONEY

Union Cabinet approves incentive for BHIM-UPI low-value transactions

IBJ Bureau
Mar 20, 2025

The Union Cabinet has approved an incentive scheme for promotion of low-value BHIM-UPI transactions for 2024-25.

The incentive scheme will be implemented at an estimated outlay of Rs 1,500 crore, Union Minister Ashwini Vaishnaw has said in a press briefing after the Cabinet meeting.

The incentive will be provided at the rate of 0.15 per cent per transaction value for transactions up to Rs 2,000 pertaining to the category of small merchants, the government has said in an official release.

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. The reimbursement of the remaining 20 per cent of the admitted claim amount for each quarter will be contingent upon fulfilment of the following conditions:

a) 10 per cent of the admitted claim will be provided only when the technical decline of the acquiring bank is less than 0.75 per cent; and

b) 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 move will ensure convenient, secure, faster cash flow and enhanced access to credit through digital footprints. Common citizens will benefit from seamless payment facilities with no additional charges.

This incentive scheme will enable small merchants to utilise UPI services at no additional cost. As small merchants are price-sensitive, incentives would encourage them to accept UPI payment.

It supports the government’s vision of a less-cash economy through formalising and accounting the transaction in digital form.