Boosting digital payments and financial inclusion
The Union Cabinet has approved a ₹1,500 crore incentive scheme for the financial year 2024–25 to encourage low-value BHIM-UPI transactions among small merchants. This move aims to enhance digital payments adoption, particularly in rural and semi-urban areas, and further solidify India’s position as a global leader in real-time digital transactions.
Key highlights of the BHIM-UPI incentive scheme
1. Zero MDR on small transactions
The scheme ensures that Merchants Discount Rate (MDR) remains at zero for transactions up to ₹2,000. This means merchants will not be charged any fee for accepting small-value UPI payments, making it more attractive for businesses to go cashless.
2. Direct incentives for small merchants
Under this initiative, small merchants will receive a 0.15% incentive for each transaction up to ₹2,000. This will encourage more micro and small businesses to integrate UPI payment solutions, reducing dependence on cash transactions.
3. Expanding UPI infrastructure in rural areas
To broaden financial inclusion, the scheme also focuses on expanding the reach of UPI infrastructure in semi-urban and rural areas. Several UPI-based solutions like UPI Lite, LiteX, and UPI 123PAY will be further promoted to facilitate seamless digital transactions, even for users without smartphones or stable internet connections.
India’s leadership in digital payments
According to the ACI Worldwide Report 2024, India accounted for a staggering 49% of all global real-time transactions in 2023. The widespread adoption of BHIM-UPI has played a crucial role in this achievement, making India a global leader in digital payment innovation. The new ₹1,500 crore incentive scheme further reinforces the government’s commitment to strengthening digital payments and financial inclusion.
Why this scheme matters
- Encourages cashless transactions at small and micro business levels.
- Reduces financial burden on merchants by eliminating transaction fees.
- Expands UPI penetration in rural and semi-urban areas.
- Strengthens India’s digital economy and enhances global leadership in fintech innovation.
Government’s vision for digital India
This initiative is part of the broader Digital India mission, which aims to transition the country into a truly digital and financially inclusive economy. With the increasing adoption of UPI payments, schemes like these empower small businesses and ensure that digital transactions remain accessible, secure, and convenient for all Indians.
