NEW DELHI, March 19: The Union Cabinet on Wednesday approved an incentive scheme for the promotion of low-value BHIM-UPI transactions (P2M) for the financial year 2024-25, with a focus on encouraging small merchants to adopt the BHIM-UPI platform. The scheme, with a total outlay of Rs 1,500 crore, will be implemented from April 1, 2024, to March 31, 2025, and aims to further the government’s vision of transitioning towards a less-cash economy.
The scheme will specifically target low-value UPI transactions, particularly those under Rs 2,000. Small merchants who conduct these transactions will receive an incentive of 0.15% per transaction, while large merchants will not be eligible for the scheme. Each quarter, 80% of the admitted claim amount will be disbursed without any conditions, while the remaining 20% will be contingent upon meeting performance criteria such as maintaining a technical decline rate of less than 0.75% and ensuring system uptime greater than 99.5%.
This initiative is designed to enhance financial access for small merchants, providing them with better opportunities to use digital payment solutions that can improve cash flow and access to credit. Citizens will also benefit from seamless UPI transactions with no additional charges, helping to encourage wider adoption of digital payments across India. The scheme aims to promote the use of UPI services, such as UPI 123PAY and UPI Lite, particularly in rural and remote areas where digital adoption has been slower, contributing to the broader goal of financial inclusion.
The government’s objectives for the scheme include promoting the indigenous BHIM-UPI platform, targeting a transaction volume of ₹20,000 crore for FY 2024-25. It also aims to strengthen the country’s digital payment infrastructure, especially in underserved regions, supporting the broader adoption of secure, reliable payment solutions.
