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.
About National Payments Corporation of India (NPCI)
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