Overview

• The Union Cabinet has approved a ₹1,500-crore incentive scheme for FY25 to promote low-value BHIM-UPI transactions among small merchants.
• The scheme offers a 0.15% incentive per transaction under ₹2,000, with banks required to meet technical benchmarks to claim full incentives.
• Small merchants, defined as those with monthly digital payment intake under ₹50,000, are the primary beneficiaries of the initiative.
• The payments industry has raised concerns that the allocated funds are insufficient to support the UPI ecosystem, which processes transactions worth ₹246.82 trillion annually.
• Over the past three fiscal years, the Indian government has disbursed ₹6,027 crore to incentivize UPI payments, reflecting its commitment to reducing cash reliance.