Boost for Small Shopkeepers as UPI Incentive Scheme Gets Green Light

The Union Cabinet, led by Prime Minister Narendra Modi, has approved an incentive scheme to promote BHIM-UPI transactions among small shopkeepers. Under this scheme, incentives totaling ₹1,500 crore will be provided during the financial year 2024-25.

The scheme, which will run from April 1, 2024, to March 31, 2025, aims to encourage digital transactions and make UPI payments more widespread, particularly among small businesses.

• The scheme applies only to UPI (P2M) transactions up to ₹2,000 at small shops and businesses.
• Shopkeepers will receive an incentive of 0.15% per transaction.
• For example, if a customer pays ₹1,000 via UPI, the shopkeeper will receive an incentive of ₹1.50.
• Banks will also receive incentives under this scheme.

✅ Fast Payouts for Banks:

• The government will immediately release 80% of the amount claimed by banks.
• The remaining 20% will be disbursed only if banks meet specific performance criteria.

To ensure a smooth and efficient payment system, banks must meet the following requirements to receive the remaining 20% incentive:

🔹 Technical Downtime Must Be Less Than 0.75% – Banks should ensure minimal payment failures.
🔹 System Uptime Should Be Above 99.5% – The payment infrastructure must function efficiently with minimal glitches.

The government aims to make UPI transactions faster, safer, and more accessible for shopkeepers while ensuring seamless digital payments for customers.

To further boost digital payments, the Merchant Discount Rate (MDR) on RuPay debit cards and BHIM-UPI transactions has been set to zero. This means:

🚀 No extra charges for merchants on UPI transactions
🚀 Faster, hassle-free payments directly into bank accounts
🚀 Easy tracking of digital transactions, improving eligibility for business loans

With this new incentive scheme, small shopkeepers will be encouraged to accept UPI payments without worrying about additional costs.

📌 Target: ₹20,000 crore worth of transactions under this incentive scheme.
📌 Expanding UPI to small towns & rural areas to increase digital adoption.
📌 Reducing system glitches to enhance the efficiency of the UPI network.

By providing direct incentives and reducing operational costs for merchants, the government is taking a major step towards a cashless economy.

Would you like insights on how this will impact your business or personal transactions? Let me know!