The Union Cabinet approved a Rs 1,300 crore incentive scheme on Wednesday to encourage RuPay Debit Cards and low-value (up to 2,000) BHIM-UPI (person to merchants-P2M) transactions in the country.
Under the plan, the government would incentivize acquiring banks by paying a percentage of the amount of transactions (P2M) made using RuPay Debit cards and low-value BHIM-UPI means of payment, with a financial investment of Rs 1,300 crore expected for the fiscal year beginning April 1, 2021.
The initiative was created in response to the government’s budget proposals (FY 2021-22) to further encourage digital transactions in the country.
The government will spend Rs 1,300 crore so that more Indians may benefit from BHIM-UPI and RuPay Debit cards, “Union Minister of Railways, Communications, and Electronics and Information Technology Ashwini Vaishnaw told reporters following a Cabinet meeting here.
According to Vaishnaw, India recorded a record number of digital transactions in November, with 423 crore worth 7.56 lakh crore (almost $100 billion).
India has embraced this degree of digital payments, and today’s cabinet decision would speed adoption even further, he said.
This initiative would assist acquiring banks in developing a strong digital payment ecosystem and promoting RuPay Debit Cards and BHIM-UPI digital transactions across all sectors and segments of the population, thereby strengthening digital payments in India.
It will also assist in making digital forms of payment available to unbanked and marginalised communities who are not part of the official banking and financial system.
“PCI wholeheartedly supports the cabinet decision on the incentive programme for Rupay Debit Cards and UPI,” stated Vishwas Patel, Chairman, Payments Council of India and Director, Infibeam Avenues. Following demonetization in 2016, we have witnessed a shift toward digital transactions, with Rupay cards gaining in popularity throughout the country, particularly in rural places where using a card was formerly considered a curiosity. UPI has made digital payments straightforward and available to everyone, whether it’s between people or between merchants. This move to incentivize small-value transactions on UPI and Rupay Debit will go a long way toward advancing the objective of a “less-cash society.”
“The industry has had its share of issues since the announcement of ZERO MDR,” he continued, “but they will greatly benefit from this initiative of reimbursement of transaction charges levied on digital payments, which will assist them in scaling up payments infrastructure in the country, thereby enhancing financial inclusion.”
Source: The Hindu