The Modi government has taken an important decision to promote digital transactions and provide relief to small traders. The government has approved a plan to bear the Merchant Discount Rate (MDR) on UPI transactions up to Rs 2,000.

The Union Cabinet on Wednesday approved a fund of Rs 1,500 crore under the scheme for FY 2024-25.
This will directly benefit small traders and increase the reach of digital payments even more.

The aim of the government is not to put financial burden on small traders and customers adopting digital payments.

What is this incentive scheme?

Under this scheme, the government will give the MDR charge taken from the merchant on UPI payment up to Rs 2,000.
The total estimated cost of the scheme has been kept at Rs 1,500 crore.
This incentive will be for small traders, so that they can accept UPI payment without any additional fees.

Cabinet statement said:
“The person has been approved by a person (P2M) incentive scheme 'to promote' low value Bhim-UPI transactions' for 2024-25 financial year.”

Under this scheme, an incentive will be given at the rate of 0.15% per transaction on UPI payment up to Rs 2,000.

What is a merchant discount rate (MDR)?

MDR (Merchant Discount Rate) is the fee that the merchant (merchant) gives the bank to process online.
MDR was used on UPI transactions up to Rs 2,000 before Corona, but it was removed by the government in 2020.