The Modi government has taken a significant step towards promoting digital payments in India, approving a ₹1,500 crore incentive to encourage low-value BHIM-UPI transactions among small merchants. This move aims to boost the country's journey towards a cashless economy.
Key Highlights of the Incentive Scheme:
Eligibility: The scheme covers UPI transactions up to ₹2,000 for small merchants.
Incentive Rate: An incentive of 0.15% per transaction value will be provided for eligible transactions.
Disbursement: 80% of the admitted claim amount will be disbursed without conditions, while the remaining 20% will be contingent upon the acquiring bank's technical decline and system uptime.
Benefits of the Scheme:
Convenience and Security: Digital payments provide convenience, security, and faster cash flow for merchants and customers.
Enhanced Access to Credit: Digital footprints enable better access to credit for small merchants.
Promoting Financial Inclusion: The scheme supports the government's vision of a less-cash economy, formalizing transactions and promoting financial inclusion.
Objectives of the Scheme:
Promoting Indigenous BHIM-UPI Platform: Achieving a target of ₹20,000 crore total transaction volume in FY 2024-25.
Supporting Payment System Participants: Building a robust and secure digital payments infrastructure.
Penetrating UPI in Rural Areas: Promoting innovative products like feature phone-based and offline payment solutions.
The payments industry has expressed concerns over the adequacy of the ₹1,500 crore incentive, suggesting it may hinder ecosystem growth. However, the government's efforts to promote digital payments are expected to have a positive impact on the country's journey towards a cashless economy.
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