Govt. Announces Rs.1,500 Crore Incentive Scheme to Boost Low-Value BHIM-UPI Transactions

The Ministry of Finance has introduced a new Incentive Scheme for the Promotion of Low-Value BHIM-UPI Transactions (Person to Merchant – P2M) for FY 2024-25, with an estimated outlay of Rs. 1,500 crore. 

This initiative aims to further accelerate digital payment adoption, particularly among small merchants and consumers, ensuring seamless and cost-free transactions.

Key Highlights of the BHIM-UPI Incentive Scheme

• Scheme Duration: April 1, 2024, to March 31, 2025.
• Transaction Limit: Covers UPI (P2M) transactions up to ₹2,000.
• Target Beneficiaries: Small merchants with an annual turnover up to ₹20 lakh (as per RBI guidelines).
• Incentive Structure:
  • 0.15% per transaction will be provided to acquiring banks promoting eligible low-value transactions.
  • Quarterly disbursement of incentives, with 80% of the claim paid unconditionally.
  • The remaining 20% is linked to technical efficiency:
    • 10% is payable if the technical decline rate is below 0.75%.
    • 10% is payable if the system uptime exceeds 99.5%.

Why Does This Scheme Matters?

With India witnessing an exponential rise in digital transactions—from 2,071 crore in FY 2017-18 to 18,737 crore in FY 2023-24—this scheme aims to sustain momentum by targeting untapped markets and sectors.

Consumers will continue enjoying seamless, round-the-clock UPI services at zero cost, while small merchants benefit from a boost in digital payments without additional financial burden. The Department of Financial Services (DFS), in collaboration with NPCI, will monitor the scheme’s impact and adjust implementation guidelines as needed.

This initiative aligns with India’s vision of a cashless economy and strengthens the country’s digital payment infrastructure.

Notification Details

Notification No. F. No. 5/11/2024-DP-DFS

Date: 21/03/2025

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