Cabinet Decisions: The Cabinet chaired by PM Narendra Modi has approved the UPI incentive scheme for small shopkeepers. Incentives of ₹1500 crore will be given in the financial year 2024-25.

The Union Cabinet, under the leadership of Prime Minister Narendra Modi, has approved the "Incentive Scheme for Promotion of BHIM-UPI Transactions." This scheme aims to provide incentives to small shopkeepers (P2M) for accepting payments through UPI. The scheme is set to run from April 1, 2024, to March 31, 2025, with a total government expenditure of approximately Rs 1,500 crore.

The approved scheme will be applicable only to UPI (P2M) transactions up to Rs 2,000, specifically targeting small shopkeepers. Under this scheme, shopkeepers will receive an incentive of 0.15% on every transaction. For instance, if a customer purchases goods worth Rs 1,000 and pays via UPI, the shopkeeper will receive an incentive of Rs 1.5. Banks will also be entitled to incentives, with the government disbursing 80% of the claimed amount immediately.

Banks will receive the remaining 20% of the incentive only if:

• The technical failure rate of the bank is less than 0.75%.
• The system uptime of the bank is above 99.5%.

According to government sources, this scheme offers an easy, secure, and fast payment option for shopkeepers. The money will be credited directly to the shopkeeper's bank account without any extra charges. Additionally, digital transaction records will be maintained, which will facilitate easier access to loans for shopkeepers. Customers will also benefit from a seamless and cost-free payment experience.

The government's objective is to facilitate transactions worth Rs 20,000 crore in the financial year 2024-25. The scheme also aims to support entities maintaining the payment system and expand UPI adoption in small towns and rural areas while minimizing technical issues.

Previously, the merchant discount rate (MDR) on RuPay debit card and BHIM-UPI transactions was set at zero. This new incentive scheme further encourages shopkeepers to accept UPI payments, thereby promoting digital transactions across the country.