Boost for Small Shopkeepers as UPI Incentive Scheme Gets Green Light

The Union Cabinet, led by Prime Minister Narendra Modi, has approved an incentive scheme to promote BHIM-UPI transactions among small shopkeepers. Under this scheme, incentives totaling ₹1,500 crore will be provided during the financial year 2024-25.

The scheme, which will run from April 1, 2024, to March 31, 2025, aims to encourage digital transactions and make UPI payments more widespread, particularly among small businesses.

🔹 Incentives for UPI Transactions Up to ₹2,000

• The scheme applies only to UPI (P2M) transactions up to ₹2,000 at small shops and businesses.
• Shopkeepers will receive an incentive of 0.15% per transaction.
• For example, if a customer pays ₹1,000 via UPI, the shopkeeper will receive an incentive of ₹1.50.
• Banks will also receive incentives under this scheme.

✅ Fast Payouts for Banks:

• The government will immediately release 80% of the amount claimed by banks.
• The remaining 20% will be disbursed only if banks meet specific performance criteria.

🔹 Conditions for Banks to Receive Full Incentives

To ensure a smooth and efficient payment system, banks must meet the following requirements to receive the remaining 20% incentive:

🔹 Technical Downtime Must Be Less Than 0.75% – Banks should ensure minimal payment failures.
🔹 System Uptime Should Be Above 99.5% – The payment infrastructure must function efficiently with minimal glitches.

The government aims to make UPI transactions faster, safer, and more accessible for shopkeepers while ensuring seamless digital payments for customers.

🔹 Zero Merchant Discount Rate (MDR) to Promote UPI Payments

To further boost digital payments, the Merchant Discount Rate (MDR) on RuPay debit cards and BHIM-UPI transactions has been set to zero. This means:

🚀 No extra charges for merchants on UPI transactions
🚀 Faster, hassle-free payments directly into bank accounts
🚀 Easy tracking of digital transactions, improving eligibility for business loans

With this new incentive scheme, small shopkeepers will be encouraged to accept UPI payments without worrying about additional costs.

🔹 Government’s Vision for Digital Transactions in 2024-25

📌 Target: ₹20,000 crore worth of transactions under this incentive scheme.
📌 Expanding UPI to small towns & rural areas to increase digital adoption.
📌 Reducing system glitches to enhance the efficiency of the UPI network.

By providing direct incentives and reducing operational costs for merchants, the government is taking a major step towards a cashless economy.

Would you like insights on how this will impact your business or personal transactions? Let me know!