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The Union Cabinet on Wednesday approved extension of incentive on transaction up to ₹2,000 through RuPay Debit Cards and BHIM-UPI transactions.
A statement issued by the Government said that the approved incentive scheme for promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (P2M) in FY2022-23 has a financial outlay of ₹2,600 crore. Under the said scheme, acquiring banks will be provided financial incentive, for promoting Point-of-Sale (PoS) and e-commerce transactions using RuPay Debit Cards and low-value BHIM-UPI transactions (P2M) for the current financial year FY23.
Finance Minister Nirmala Sitharaman, in her speech on the Budget for FY23, announced the Government’s intent to continue the financial support for digital payments announced in the previous Budget, with a focus on promoting use of payment platforms that are economical and user-friendly. The scheme has been formulated in compliance with the aforesaid Budget announcement.
Growth in digital payments
In FY22, the government had approved an incentive scheme in compliance with the Budget announcement of FY22 to give a further boost to digital transactions. As a result, total digital payments transactions have registered a year-on-year growth of 59 per cent, rising from ₹5,554 crore in FY21 to ₹8,840 crore in FY22. BHIM-UPI transactions have registered a year-on-year growth of 106 per cent, rising from ₹2,233 crore in FY21 to ₹4,597 crore in FY22.
Various stakeholders in the digital payments systems and the Reserve Bank of India (RBI) expressed concerns regarding the potential adverse impact of the zero MDR regime on the growth of the digital payments ecosystem. Further, the National Payments Corporation of India (NPCI) requested, among other things, for incentivisation of BHIM-UPI and RuPay Debit Card transactions to create a cost-effective value proposition for ecosystem stakeholders, increase merchant acceptance footprints and faster migration from cash payments to digital payments.
Further, the statement said that the incentive scheme will facilitate building of a robust digital payment ecosystem and promoting RuPay Debit Card and BHIM-UPI digital transactions. “In-line with the objective of ‘Sabka Saath, Sabka Vikas’, the scheme will also promote UPI Lite and UPI 123PAY as economical and user-friendly digital payments solutions and enable further deepening of digital payments in the country, across all sectors and segments of the population,” added the statement.
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