Why in the News? 

Union Cabinet approves Incentive scheme for promotion of low-value BHIM-UPI transactions (P2M).

Key Highlights of the Scheme

• Coverage: It will cover UPI Person-to-Merchant (P2M) transactions and will be implemented at an outlay of 1,500 crore for FY 2024-25.
• Incentive: of 0.15% per transaction will be provided for only UPI transactions up to Rs.2,000 pertaining to the category of small merchants.
  • Incentive is paid to the Acquiring bank (Merchant's bank) and shared with Issuer Bank (Customer's Bank), Payment Service Provider Bank and App Providers.
• Aim: It will enhance access to credit through digital footprints, enable small merchants to avail of UPI services at no additional cost and promote a less-cash economy.
• Objective: 
  • Promotion of indigenous BHIM-UPI platform.
  • Achieving the target of 20,000 crore total transaction volume in FY 2024-25.
  • Penetration of UPI in tier 3 to 6 cities, especially in rural & remote areas by promoting innovative products like feature phone-based (UPI 123PAY) & offline (UPI Lite/UPI LiteX) payment solutions.

About Bharat Interface for Money (BHIM)

• BHIM: It is a Unified Payments Interface (UPI)-based mobile application developed by National Payments Corporation of India (NPCI).
  • UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank). 
• Aim: Launched in 2016 to promote cashless payments and financial inclusion in India.

Key Features of BHIM

• Simple and Fast Transactions: Enables instant money transfers using a mobile number, Virtual Payment Address (VPA), or QR code.
• UPI-Based Payments: Works across multiple banks, eliminating the need for IFSC codes or account details.
• Secure with Multi-Factor Authentication: Uses a UPI PIN and device binding through SMS for enhanced security.
• Supports Multiple Payment Modes: Users can make payments via UPI ID, Aadhaar, account number + IFSC, and mobile numbers.