Union Cabinet Approves ₹1,500 Cr BHIM-UPI Incentive Scheme
In its latest move to promote a less-cash economy and encourage digital transactions, the Union Cabinet has approved a massive ₹1,500 crore incentive scheme for the promotion of low-value BHIM-UPI Person to Merchant (P2M) transactions for the financial year 2024-25. The scheme, which aims to formalize and account transactions in digital form, will benefit small merchants and promote digital payments across the country.
According to the approved scheme, small merchants will receive a 0.15% incentive per transaction of up to ₹2,000. This means that merchants will receive a maximum incentive of ₹3 per transaction. The scheme is expected to give a significant boost to digital transactions, particularly in the low-value segment, and promote the adoption of BHIM-UPI as a preferred mode of payment.
The BHIM-UPI (Unified Payments Interface) is a real-time payment system that enables peer-to-peer transactions, bill payments, and fund transfers. It has gained immense popularity in recent years, with over 30.1 crore BHIM-UPI transactions worth ₹1.35 lakh crore recorded in January 2023 alone. The scheme is expected to further accelerate the growth of digital transactions and reduce the dependence on cash transactions.
The incentive scheme is part of the government’s efforts to promote digital payments and reduce the cash economy. In recent years, the government has taken several initiatives to promote digital payments, including the demonetization of high-denomination currency notes in 2016 and the introduction of the Goods and Services Tax (GST). The scheme is expected to complement these initiatives and promote a less-cash economy.
The scheme will benefit small merchants, who are often at the receiving end of cash transactions. The incentive will encourage them to opt for BHIM-UPI as a preferred mode of payment, reducing their dependence on cash transactions. This will not only reduce the risk of pilferage and theft but also make it easier for merchants to keep track of their transactions.
The scheme will also promote digital literacy among small merchants, who often struggle to use digital payment systems. The incentive will encourage them to use BHIM-UPI and other digital payment systems, making it easier for them to accept payments and manage their finances.
The scheme is also expected to promote financial inclusion, particularly in rural areas where access to digital payment systems is limited. The incentive will encourage small merchants in rural areas to adopt digital payment systems, making it easier for residents to access financial services.
The government has set a target of increasing the number of BHIM-UPI transactions by 50% in the next financial year. The incentive scheme is expected to play a crucial role in achieving this target and promoting digital payments across the country.
The scheme will be implemented through a combination of online and offline channels, including mobile apps, USSD, and POS terminals. The government has also set up a monitoring committee to track the progress of the scheme and ensure its effective implementation.
In conclusion, the Union Cabinet’s approval of the ₹1,500 crore BHIM-UPI incentive scheme is a significant step towards promoting a less-cash economy and encouraging digital transactions. The scheme will benefit small merchants, promote financial inclusion, and reduce the dependence on cash transactions. With its focus on promoting digital payments and financial inclusion, the scheme is expected to have a positive impact on the economy and society as a whole.
News Source:
https://www.moneycontrol.com/news/business/cabinet-approves-rs-1-500-crore-incentive-for-upi-12969490.html/amp
