The Union Cabinet chaired by the Prime Minister Narendra Modi today approved the ‘Incentive Scheme for promotion of low-value BHIM-UPI transactions Person to Merchant (P2M)’ for the financial year 2024-25 in the following manner:
i. The incentive scheme for promotion of low-value BHIM-UPI transactions (P2M) will be implemented at an estimated outlay of 1,500 crore, from 01.04.2024 to 31.03.2025.
ii. Only the UPI (P2M) transactions upto 2,000/- for Small Merchants are covered under the scheme.
| Category | Small Merchant | Large Merchant |
| Up to Rs. 2k | Zero MDR / Incentive (@0.15%) | Zero MDR / No Incentive |
| Over Rs. 2k | Zero MDR / No Incentive | Zero MDR / No Incentive |
iii. Incentive at the rate of 0.15% per transaction value will be provided for transactions upto Rs.2,000 pertaining to category of small merchants.
iv. For all the quarters of the scheme, 80% of the admitted claim amount by the acquiring banks will be disbursed without any conditions.
v. The reimbursement of the remaining 20% of the admitted claim amount for each quarter will be contingent upon fulfilment of the following conditions:
a) 10% of the admitted claim will be provided only when the technical decline of the acquiring bank will be less than 0.75%; and
b) The remaining 10% of the admitted claim will be provided only when the system uptime of the acquiring bank will be greater than 99.5%.
Benefits:
i. Convenient, secure, faster cash flow, and enhanced access to credit through digital footprints.
ii. Common citizens will benefit from seamless payment facilities with no additional charges.
iii. Enable small merchants to avail of UPI services at no additional cost. As small merchants are price-sensitive, incentives would encourage them to accept UPI payment.
iv. Supports the Government’s vision of a less-cash economy through formalizing and accounting the transaction in digital form.
v. Efficiency gain- 20% incentive is contingent upon banks maintaining high system uptime and low technical decline. This will ensure round-the-clock availability of payment services to citizens.
vi. Judicious balance of both the growth of UPI transactions and the minimum financial burden on the Government exchequer.
