{"id":45426,"date":"2025-03-20T11:38:16","date_gmt":"2025-03-20T06:08:16","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=45426"},"modified":"2025-05-06T20:06:32","modified_gmt":"2025-05-06T14:36:32","slug":"cabinet-approves-1500-crore-incentive-for-low-value-bhim-upi-transactions","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/cabinet-approves-1500-crore-incentive-for-low-value-bhim-upi-transactions\/","title":{"rendered":"Cabinet Approves \u20b91,500 Crore Incentive for Low-Value BHIM-UPI Transactions"},"content":{"rendered":"<h2>What\u2019s in Today\u2019s Article?<\/h2>\n<ul>\n<li>BHIM-UPI Incentive Scheme Latest News<\/li>\n<li>Bharat Interface for Money (BHIM)<\/li>\n<li>UPI Incentive of \u20b91,500 Crore to Banks<\/li>\n<li>BHIM-UPI Incentive Scheme FAQs<\/li>\n<\/ul>\n<h2>BHIM-UPI Incentive Scheme Latest News<\/h2>\n<ul>\n<li>The Union Cabinet chaired by the PM Modi approved the \u2018Incentive Scheme for promotion of low-value BHIM-UPI transactions Person to Merchant (P2M)\u2019 for the financial year 2024-25.<\/li>\n<\/ul>\n<h2>Bharat Interface for Money (BHIM)<\/h2>\n<ul>\n<li>BHIM is a digital payment platform that enables fast, secure, and reliable transactions using the <strong>Unified Payments Interface (UPI)<\/strong> via a <strong>mobile app<\/strong> and *<i>USSD (99#) service<\/i>.<\/li>\n<\/ul>\n<h3>Launch and Adoption<\/h3>\n<ul>\n<li>Launched by the <strong>Prime Minister on 30th December 2016<\/strong>.<\/li>\n<li>Achieved <strong>1 crore downloads<\/strong> on Android Play Store and <strong>over 2 million transactions<\/strong> within 10 days.<\/li>\n<\/ul>\n<h3>Key Features<\/h3>\n<ul>\n<li><strong>Interoperability<\/strong>: Works seamlessly with other UPI applications and bank accounts.<\/li>\n<li><strong>Developed by NPCI<\/strong>: Created under RBI&#8217;s guidance to enhance retail digital payments.<\/li>\n<li><strong>User-Friendly Design<\/strong>: Offers quick onboarding, an intuitive interface, and seamless transactions.<\/li>\n<\/ul>\n<h3>Benefits for Merchants<\/h3>\n<ul>\n<li>Enables direct bank account payments.<\/li>\n<li>Provides a <strong>Virtual Payment Address (VPA)<\/strong> and a <strong>QR code<\/strong> for easy transactions.<\/li>\n<\/ul>\n<h2>UPI Incentive of \u20b91,500 Crore to Banks<\/h2>\n<ul>\n<li>The Union cabinet has announced an incentive scheme for UPI payments of less than \u20b92,000 for 2024\u201325 with an outlay of around \u20b91,500 crore.<\/li>\n<\/ul>\n<h3>Background<\/h3>\n<ul>\n<li>The Government promotes digital payments as part of its financial inclusion strategy while ensuring diverse payment options.\u00a0<\/li>\n<li>The cost of digital transactions is covered through the Merchant Discount Rate (MDR), which is up to 0.90% for debit cards and up to 0.30% for UPI P2M transactions.\u00a0\n<ul>\n<li>MDR is the fee banks charge merchants for processing transactions.<\/li>\n<\/ul>\n<\/li>\n<li>Since January 2020, MDR has been waived for RuPay Debit Cards and BHIM-UPI transactions via legal amendments.\u00a0<\/li>\n<li>To support payment service providers, the Cabinet approved this incentive Scheme.<\/li>\n<\/ul>\n<h3>Aim of the Scheme<\/h3>\n<ul>\n<li>The government aims to promote digital payments and increase BHIM-UPI transaction volumes to 200 billion in FY25.<\/li>\n<li>The incentive focuses on low-value peer-to-merchant (P2M) transactions to encourage small merchants.<\/li>\n<\/ul>\n<h3>Objectives of the Scheme<\/h3>\n<ul>\n<li>Promote the indigenous BHIM-UPI platform.<\/li>\n<li>Achieve a transaction volume target of \u20b920,000 crore in FY25.<\/li>\n<li>Strengthen digital payments infrastructure.<\/li>\n<li>Expand UPI penetration in rural and remote areas through solutions like UPI 123PAY (feature phone-based) and UPI Lite\/UPI LiteX (offline payments).<\/li>\n<li>Maintain high system uptime and reduce technical failures.<\/li>\n<\/ul>\n<h3>Incentive Structure<\/h3>\n<ul>\n<li>For transactions up to \u20b92,000:\u00a0\n<ul>\n<li>Small merchants: 0.15% incentive.<\/li>\n<li>Large merchants: No incentive.<\/li>\n<\/ul>\n<\/li>\n<li>For transactions above \u20b92,000: No incentives for any merchant.<\/li>\n<\/ul>\n<h3>Benefits of the Scheme<\/h3>\n<ul>\n<li>Enhances digital transactions&#8217; convenience, security, and efficiency.<\/li>\n<li>Ensures zero additional charges for consumers and small merchants.<\/li>\n<li>Encourages UPI adoption among small merchants, aiding financial inclusion.<\/li>\n<li>Supports the government\u2019s push for a less-cash economy.<\/li>\n<li>Ensures 24\/7 availability of UPI services by incentivizing banks to maintain uptime and minimize technical failures.<\/li>\n<li>Balances UPI growth with minimal financial burden on the government.<\/li>\n<\/ul>\n<h3>Industry Concerns Over Insufficient Allocation<\/h3>\n<ul>\n<li>The digital payment industry believes \u20b91,500 crore is inadequate for sustaining UPI processing costs.<\/li>\n<li>Industry estimates suggest \u20b94,000-\u20b95,000 crore is needed to support the ecosystem.<\/li>\n<li>Experts suggest introducing a controlled MDR (Merchant Discount Rate) of 0.25% for merchants with over \u20b940 lakh turnover while keeping incentives for smaller merchants.<\/li>\n<\/ul>\n<h2>BHIM-UPI Incentive Scheme FAQs<\/h2>\n<p><strong>Q1.<\/strong> What is the new BHIM-UPI incentive scheme?<\/p>\n<p><strong>Ans.<\/strong> The Indian government allocated \u20b91,500 crore for incentivizing low-value BHIM-UPI transactions in FY25.<\/p>\n<p><strong>Q2. <\/strong>Who benefits from the BHIM-UPI incentive scheme?<\/p>\n<p><strong>Ans. <\/strong>Small merchants accepting transactions below \u20b92,000 will receive incentives to promote digital payments.<\/p>\n<p><strong>Q3. <\/strong>Why was MDR waived for RuPay and BHIM-UPI?<\/p>\n<p><strong>Ans. <\/strong>To encourage digital payments, the government waived MDR on RuPay debit cards and BHIM-UPI transactions since 2020.<\/p>\n<p><strong>Q4. <\/strong>What is the government\u2019s target for UPI transactions?<\/p>\n<p><strong>Ans. <\/strong>The goal is to reach 200 billion transactions and \u20b920,000 crore transaction volume in FY25.<\/p>\n<p><strong>Q5. <\/strong>How does this scheme impact financial inclusion?<\/p>\n<p><strong>Ans. <\/strong>It expands UPI penetration in rural areas, strengthens the digital payments ecosystem, and enhances merchant adoption.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/business\/cabinet-approves-1500-crore-to-incentivise-low-value-upi-transactions\/article69348872.ece#:~:text=The%20incentive%20scheme%20for%20the,are%20covered%20under%20the%20scheme.\" target=\"_blank\" rel=\"nofollow noopener\">TH<\/a> | <a href=\"https:\/\/www.pib.gov.in\/PressReleasePage.aspx?PRID=2112771\" target=\"_blank\" rel=\"nofollow noopener\">PIB<\/a> | <a href=\"https:\/\/www.business-standard.com\/industry\/news\/union-cabinet-approves-rs-1-500-cr-scheme-to-boost-low-value-bhim-upi-txns-125031901333_1.html\" target=\"_blank\" rel=\"nofollow noopener\">BS<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Indian government launches a \u20b91,500 crore incentive scheme for BHIM-UPI transactions under \u20b92,000 to boost digital payments in FY25.<\/p>\n","protected":false},"author":5,"featured_media":45427,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-45426","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/45426","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=45426"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/45426\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/45427"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=45426"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=45426"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=45426"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}