Cabinet approves Rs 2,600 crore incentive for digital transactions
The incentive programme for the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (person-to-merchant) for a period of one year starting in April 2022 has been authorised by the Union Cabinet, which is presided over by Prime Minister Narendra Modi.
A budgetary investment of Rs 2,600 crore has been allocated for the incentive programme for the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (P2M) in FY 2022–23. For the current fiscal year FY 2022–23, acquiring banks will get financial incentives under the aforementioned programme to encourage Point-of-Sale (PoS), e-commerce, and low-value BHIM–UPI transactions (P2M).
The government intends to maintain the financial support for digital payments introduced in the previous Budget, with an emphasis on encouraging usage of payment platforms that are affordable and user-friendly, the Finance Minister stated in her address on the Budget for FY 2022-23. The plan was created in accordance with the aforementioned Budget release.
In accordance with the FY2021–22 budget release, the government established an incentive programme in FY2021-22 to further promote digital transactions. Because of this, the overall volume of digital payment transactions has increased annually by 59%, from 5,554 crore in FY2020–21 to 8,840 crore in FY202–21. Transactions through BHIM-UPI increased by 106% year over year, from 2,233 crore in FY2020–21 to 4,597 crore in FY202–21.
The Reserve Bank of India (RBI) and a number of other participants in the digital payments ecosystem raised concerns about the negative effects of the zero MDR regime on the development of the digital payments ecosystem. The National Payments Corporation of India (NPCI) also asked for the encouragement of BHIM-UPI and RuPay Debit Card transactions in order to develop a cost-effective value proposition for ecosystem stakeholders, expand merchant acceptance footprints, and hasten the transition from cash to digital payments.
The Indian government is launching a number of measures to promote digital payments all around the nation. Digital payment transactions have grown significantly during the past few years. Digital payments made it easier for businesses, notably small retailers, to operate during the Covid-19 crisis and contributed to the upkeep of social distance. In the month of December 2022, UPI set a record with 782.9 billion digital payment transactions worth $12.82 trillion.
This incentive programme will make it easier to develop a strong digital payment ecosystem and promote digital transactions using the BHIM-UPI and RuPay Debit Cards. In keeping with the goal of ‘Sabka Saath, Sabka Vikas,’ the programme will also advocate for UPI Lite and UPI 123PAY as affordable and user-friendly digital payment options and help the nation’s adoption of digital payments across all industries and demographic groups.
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