Union Cabinet approves Incentive scheme for promotion of low-value BHIM-UPI transactions (P2M) | Current Affairs | Vision IAS
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Union Cabinet approves Incentive scheme for promotion of low-value BHIM-UPI transactions (P2M)

Posted 20 Mar 2025

2 min read

The scheme will cover UPI Person-to-Merchant (P2M) transactions and will be implemented at an outlay of 1,500 crore for FY 2024-25.

Key Highlights of the Scheme

  • Incentive: Incentive of 0.15% per transaction will be provided for transactions upto Rs.2,000 pertaining to 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. 
  • 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 such as feature phone based (UPI 123PAY) & offline (UPI Lite/UPI LiteX) payment solutions.
  • Key Benefits: Enable small merchants to avail of UPI services at no additional cost.
    • Earlier, in 2020, Merchant Discount Rate was made zero for BHIM-UPI transactions.
      • MDR refers to the rate merchants are charged for accepting Debit Card and Credit Card payments and funds paid via net banking and Digital Wallets.

About Bharat Interface for Money (BHIM), 2016

  • A payment app that enables easy transactions using the Unified Payments Interface (UPI)
    • UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank)
  • Developed by National Payments Corporation of India (NPCI) to drive digital payments.
Image showing key features of UPI

Related News 

NPCI International Payments Limited (NIPL)

NIPL has partnered with Singapore-based payment company to expand the acceptance of UPI. 

About NIPL

  • It has been incorporated in 2020 as a wholly owned subsidiary of NPCI. 
  • It is devoted for deployment of RuPay (domestic card scheme) and UPI (mobile payment solution) outside of India.
  • Tags :
  • BHIM
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