The Union Cabinet on Wednesday approved a Rs 2,600 crore incentive scheme for the promotion of RuPay debit cards and low-value BHIM-UPI transactions for the current financial year, meeting a key demand of stakeholders.
Under the scheme, acquiring banks will be provided financial incentives, for promoting Point-of-Sale (PoS) and e-commerce transactions using RuPay debit cards and low-value BHIM-UPI transactions (person-to-merchant). The scheme has been announced in line with the FY23 Budget promise to promote the use of payment platforms that are economical and user-friendly.
RuPay is India’s answer to international payment networks and is a first-of-its-kind global card payment network, with wide acceptance of ATMs, PoS devices and e-commerce websites. RuPay is a product of the National Payments Corporation of India (NPCI), the umbrella organisation that powers retail payments in the country.
The government had approved an incentive scheme in compliance with the budget announcement of FY22 to give a further boost to digital transactions. Total digital payments transactions have registered a year-on-year growth of 59%, rising from 55.54 billion in FY21 to 88.4 billion in FY22. BHIM-UPI transactions have registered a year-on-year growth of 106%, rising from 22.33 billion in FY21 to 45.97 billion in FY22.
During the Covid-19 pandemic, digital payments facilitated the functioning of businesses, including small merchants, and helped maintain social distancing. UPI has achieved a record of 7.83 billion digital payment transactions with a value of `12.82 trillion in December 2022.
Finance minister Nirmala Sitharaman on Tuesday said that in 2022, 74 billion UPI transactions amounting to `125 trillion were made in India.
However, various stakeholders and the Reserve Bank of India (RBI) had expressed concerns regarding the potential adverse impact of the zero MDR (merchant discount rate) regime on the growth of the digital payments ecosystem.
The NPCI had requested for the incentivisation of BHIM-UPI and RuPay debit card transactions to create a cost-effective value proposition for ecosystem stakeholders, increase merchant acceptance footprints and faster migration from cash payments to digital payments.