Govt Greenlights Rs 2,600 Cr Plan to Boost BHIM-UPI, Rupay

In a significant move to bolster digital transactions, the Union Cabinet has given the nod to an incentive scheme designed to promote the usage of RuPay Debit Cards and low-value BHIM-UPI transactions (person-to-merchant). The approved scheme, slated to be effective for a one-year duration starting from April 2022, carries a financial outlay of Rs 2,600 crore.

Financial Boost for Digital Transactions

The financial incentive scheme aims to stimulate Point-of-Sale (PoS) and e-commerce transactions utilizing RuPay Debit Cards and low-value BHIM-UPI transactions (P2M) throughout the fiscal year 2022-23. The Finance Minister, in the FY2022-23 Budget speech, reaffirmed the government's commitment to sustaining support for digital payments, emphasizing platforms that are cost-effective and user-friendly.

Building on the success of the incentive scheme implemented in FY2021-22, which saw a substantial year-on-year growth of 59% in total digital payment transactions—from 5,554 crore in FY2020-21 to 8,840 crore in FY2021-22—the government is poised to further propel digital transactions in the coming fiscal year.

BHIM-UPI transactions alone witnessed an impressive year-on-year growth of 106%, soaring from 2,233 crore in FY2020-21 to 4,597 crore in FY2021-22.

Addressing Concerns and Requests

Acknowledging concerns raised by stakeholders and the Reserve Bank of India (RBI) about the potential adverse impact of the zero MDR regime on digital payment growth, and responding to requests from the National Payments Corporation of India (NPCI), the government crafted this incentive scheme. The focus is on incentivizing BHIM-UPI and RuPay Debit Card transactions, creating a cost-effective value proposition for ecosystem stakeholders, expanding merchant acceptance footprints, and accelerating the transition from cash to digital payments.

Promoting Digital Payments Nationwide

The Government of India has consistently taken initiatives to promote digital payments across the country. Digital transactions have experienced remarkable growth in recent years, with digital payments playing a crucial role in sustaining businesses, particularly during the Covid-19 crisis. UPI achieved a historic milestone in December 2022, with 782.9 crore digital payment transactions valued at Rs 12.82 lakh crore.

This incentive scheme is expected to contribute to the development of a robust digital payment ecosystem. It will play a pivotal role in encouraging the use of RuPay Debit Cards and BHIM-UPI digital transactions. Aligned with the vision of 'Sabka Saath, Sabka Vikas' (Together with All, Development for All), the scheme will also promote UPI Lite and UPI 123PAY as economical and user-friendly digital payment solutions, fostering further penetration of digital payments across all sectors and demographics.

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