Govt clears ₹2.6k cr incentive scheme for digital payments

“India’s strides in digital payments will be further strengthened by today’s cabinet decision regarding promotion of RuPay Debit Cards and BHIM-UPI transactions,” Prime Minister Narendra Modi said in a tweet after the cabinet meeting.

The Union Cabinet on Wednesday approved a ₹2,600 crore incentive scheme for promotion of popular digital payment systems , RuPay Debit Cards and low-value BHIM-UPI person-to-merchant (P2M) transactions, in the current financial year.

Due to continued government incentives total digital payments transactions have registered a year-on-year growth of 59%, rising from ₹5,554 crore in 2020-21 to ₹8,840 crore in 2021-22, an official statement said. (Mint)

“India’s strides in digital payments will be further strengthened by today’s cabinet decision regarding promotion of RuPay Debit Cards and BHIM-UPI transactions,” Prime Minister Narendra Modi said in a tweet after the cabinet meeting.

Due to continued government incentives total digital payments transactions have registered a year-on-year growth of 59%, rising from ₹5,554 crore in 2020-21 to ₹8,840 crore in 2021-22, an official statement said. “BHIM-UPI transactions have registered a year-on-year growth of 106%, rising from 2,233 crore in FY2020-21 to 4,597 crore in FY2021-22,” it added.

RuPay is a product of National Payments Corporation of India (NPCI), an umbrella organisation for operating indigenous retail payments and settlement systems in India. Bharat Interface for Money (BHIM) is India’s digital payment application (app) that works through Unified Payment Interface (UPI), a system that powers multiple bank accounts into a single mobile application.

In her Budget speech on February 1, 2022, Union finance minister Nirmala Sitharaman said that the government would continue incentivising promotion of digital payment systems. “The financial support for digital payment ecosystem announced in the previous budget will continue in 2022-23. This will encourage further adoption of digital payments. There will also be a focus to promote use of payment platforms that are economical and user friendly,” she said. The 2021-22 budget provided for ₹1,500 crore financial incentive to promote digital modes of payment.

As per the Cabinet’s approval on Wednesday, banks will be provided financial incentive for promoting Point-of-Sale (PoS) and e-commerce transactions using RuPay Debit Cards and low-value BHIM-UPI transactions (P2M) for the current financial year, the statement said. The scheme has been formulated in compliance with the aforesaid budget announcement made by FM in February 1 last year, it added.

This incentive scheme will facilitate building of a robust digital payment ecosystem and promoting RuPay Debit Card and BHIM-UPI digital transactions, the statement said. “In-line with the objective of ‘Sabka Saath, Sabka Vikas’, the scheme will also promote UPI Lite and UPI 123PAY as economical and user-friendly digital payments solutions and enable further deepening of digital payments in the country, across all sectors and segments of the population,” it added.

According to NPCI, UPI LITE is a new payment solution that leverages a trusted technology to process low value transactions that have been set at below ₹200. UPI 123PAY is an instant payment system for feature phone users who can use UPI payment service in a safe and secure manner.

Vishwas Patel, chairman of Payments Council of India (PCI) and executive director of Infibeam Avenues said, “This will further provide momentum to the payment service operators to improve the infrastructure at the last mile in the deep corners of our country and, will help in creating a robust digital payment ecosystem. Government should also ensure that the benefit is reaching the last leg of the value chain i.e. payment aggregators. However, based on the current volume of payments, higher support is needed for the industry to help further expand infrastructure for these growing transactions.”

The government is taking various initiatives for promotion of digital payments across the country, the statement said. “Over past years, digital payment transactions have witnessed tremendous growth. During the Covid-19 crisis, digital payments facilitated functioning of businesses, including small merchants, and helped in maintaining social distancing. UPI has achieved a record of 782.9 crore digital payment transactions with a value of ₹ 12.82 lakh crore in the month of December 2022,”