For the fiscal year 2024–2025, the Union Cabinet, led by Prime Minister Narendra Modi, has approved a ₹1,500 crore incentive program to encourage small merchants to conduct low-value BHIM-UPI transactions (up to ₹2,000).
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By encouraging small retailers to use digital payment methods, this campaign seeks to increase digital payments and improve financial inclusion.

Important aspects of the plan:

Incentive Structure: For every qualified payment under ₹2,000, acquiring banks will get incentives equal to 0.15% of the transaction value. The purpose of this structure is to encourage banks to support and encourage small merchants to conduct low-value UPI transactions.

Prime Minister Narendra Modi’s Union Cabinet has approved a ₹1,500 crore incentive package for the fiscal year 2024–2025 to encourage small merchants to perform low-value BHIM-UPI transactions (up to ₹2,000).
Indian TV News
This program aims to foster financial inclusion and boost digital payments by promoting the use of digital payment systems by small shops.

Key elements of the strategy:

Incentive Structure: Acquiring banks will get incentives equal to 0.15% of the transaction value for each eligible payment under ₹2,000. This framework aims to incentivize banks to assist and promote low-value UPI transactions by small merchants.

Context:

The government’s attempts to encourage digital payments are being carried out with this program. At a compound annual growth rate (CAGR) of 46%, the total number of digital payments in the nation increased from 8,839 crore in FY 2021–2022 to 18,737 crore in FY 2023–2024 thanks in large part to the previous incentive program for RuPay Debit Cards and low-value BHIM-UPI transactions.

Effect on Small Business Owners:

Small merchants, who frequently deal with low-value transactions, immediately profit from the scheme’s focus on sales up to ₹2,000. By offsetting the expenses of digital transactions, the incentives want to make it easier for small enterprises to embrace and promote digital payment systems. It is anticipated that this action will advance the objective of a cashless economy and improve the ecology for digital payments.

Small merchants are essential to India’s digital economy, and the government’s sustained support through such incentive programs demonstrates its dedication to building a strong digital payment infrastructure.