Cabinet clears Rs 2,600 Cr scheme to promote RuPay, low-value BHIM-UPI transactions
Banks will be provided financial incentives for promoting PoS and e-commerce transactions using RuPay and UPI this fiscal; move seen to help in building a robust digital payment ecosystem
The Union Cabinet on Wednesday (January 11) approved a ₹2,600 crore scheme for promoting RuPay debit cards and low-value BHIM-UPI transactions.
Under the scheme, banks will be provided financial incentives for promoting Point of Sale (PoS) and e-commerce transactions using RuPay and UPI in the current financial year. This will help in building a robust digital payment ecosystem. The scheme will also promote UPI Lite and UPI123PAY as economical and user-friendly digital payments.
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“Cabinet approves the incentive scheme for promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (Person-to-Merchant),” said an official tweet.
Increased government push
It may be noted that in her 2022 Budget speech, Finance Minister Nirmala Sitharaman had said the Centre aims to continue the financial support for digital payments announced in the previous Budget.
Total digital payments transactions in the country have registered a year-on-year growth of 59%, rising from 5,554 crore transactions in FY21 to 8,840 crore in FY22, per government data. In addition to this, BHIM-UPI transactions have also recorded a year-on-year growth of 106 per cent, rising from 2,233 crore in FY21 to 4,597 crore in FY22.
In December 2022, UPI achieved a record of 782.9 crore digital payment transactions with a value of ₹ 12.82 lakh-crore.
The Reserve Bank of India (RBI) as well as various stakeholders in the digital payments systems have expressed concerns regarding the potential adverse impact of the zero MDR (Merchant Discount Rate) regime on the growth of the digital payments ecosystem.
Among its many suggestions, the National Payments Corporation of India (NPCI) requested for incentivisation of BHIM-UPI and RuPay Debit Card transactions to create a cost-effective value proposition for ecosystem stakeholders, increase merchant acceptance footprints and faster migration from cash payments to digital payments. The latest Cabinet decision is seen to aid this.
With agency inputs
