The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday, approved an incentive scheme for the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (person-to-merchant) for a period of one year from April 2022 with a financial outlay of Rs 2,600 crore.
Under the said scheme, acquiring banks will be provided financial incentives, for promoting Point-of-Sale (PoS) and e-commerce transactions using RuPay Debit Cards and low-value BHIM-UPI transactions (P2M) for the current financial year.
Finance Minister Nirmala Sitharaman, in her speech on the Budget for FY2022-23, announced the government’s intent to continue the financial support for digital payments announced in the previous Budget, with a focus on promoting the use of payment platforms that are economical and user-friendly. The scheme has been formulated in compliance with the aforesaid Budget announcement.
In 2021-22, the government approved an incentive scheme in compliance with the Budget announcement of 2021-22 to give a further boost to digital transactions. As a result, total digital payments transactions have registered a year-on-year growth of 59 per cent, rising from Rs 5,554 crore in 2020-21 to Rs 8,840 crore in 2021-22. BHIM-UPI transactions have registered a year-on-year growth of 106 per cent, rising from Rs 2,233 crore in 2020-21 to Rs 4,597 crore in 2021-22.
Various stakeholders in the digital payments systems and the Reserve Bank of India (RBI) expressed concerns regarding the potential adverse impact of the zero MDR regime on the growth of the digital payments ecosystem. Further, the National Payments Corporation of India (NPCI) requested, among other things, 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 Centre is taking various initiatives for the promotion of digital payments across the country. Over the past years, digital payment transactions have witnessed tremendous growth. During the Covid-19 crisis, digital payments facilitated the functioning of businesses, including small merchants, and helped in maintaining social distancing. UPI has achieved a record of 782.9 crore digital payment transactions with a value of ₹ 12.82 lakh crore in the month of December 2022.
”This incentive scheme will facilitate the building of a robust digital payment ecosystem and promote RuPay Debit Card and BHIM-UPI digital transactions. In line with the objective of ‘Sabka Saath, Sabka Vikas’, the scheme will also promote UPI Lite and UPI 123PAY as economical and user-friendly digital payments solutions and enable further deepening of digital payments in the country, across all sectors and segments of the population,” an official press note said.