The union cabinet on Wednesday approved the incentive scheme for the promotion of low-value BHIM-UPI transactions (P2M) for the financial year 2024-25. The scheme is designed to encourage the adoption of the BHIM-UPI platform among small merchants and aligns with the government’s broader vision of transitioning towards a less-cash economy.

The initiative, with an estimated outlay of Rs 1,500 crore, will be implemented from April 1, 2024, to March 31, 2025. The focus will be on low-value UPI transactions, specifically those under Rs 2,000, conducted by small merchants.

Under the scheme, small merchants will receive an incentive of 0.15% per transaction for transactions up to Rs 2,000, while large merchants will not be eligible for this incentive. For each quarter, 80% of the admitted claim amount will be disbursed without any conditions. However, the remaining 20% will be contingent upon meeting specific performance criteria. This includes maintaining a technical decline rate of less than 0.75% and ensuring system uptime greater than 99.5%.

The scheme is designed to improve financial access for small merchants, offering them greater opportunities to use digital payment solutions that can enhance cash flow and credit access. Citizens will also benefit from seamless UPI transactions with no additional charges, further encouraging the adoption of digital payments across the country. By promoting the use of UPI services like UPI 123PAY and UPI Lite, the scheme aims to reduce reliance on cash, particularly in rural and remote areas, while also contributing to the goal of financial inclusion.

The government’s objectives for this scheme include promoting the indigenous BHIM-UPI platform, with a target transaction volume of ₹20,000 crore in FY 2024-25. It also aims to strengthen the digital payment infrastructure, especially in underserved areas, and support the wider adoption of secure and reliable payment solutions.