Cabinet Approves Incentive Scheme To Push Digital Payments

Aiming to promote digital transactions and incentivise users having Rupay debit cards and BHIM unified payments interface (UPI) system, the union cabinet on Wednesday approved reimbursement of Rs 1,300 crore on such transactions.

Elaborating about the cabinet's decision, minister for electronics and IT Ashwini Vaishnaw told media persons that the government will reimburse transaction charges levied on digital payments made by persons to the merchant as part of the merchant discount rate (MDR).

"In the coming one year the government will invest around Rs 1,300 crore so that more and more people move towards digital payments," Mr Vaishnaw said.

He also said that 423 crore digital transactions valued at Rs 7.56 lakh crore took place in November, 2021 alone.

Under the scheme, the acquiring banks will be incentivised by the government, by way of paying a percentage of value of transactions (P2M) done through RuPay debit cards and low-value BHIM-UPI modes of payments, at an estimated financial cost of Rs 1,300 crore for a period of one year, which will be effective from April 01, 2021.

This scheme will facilitate acquiring banks in building robust digital payment ecosystem and promoting RuPay Debit card and BHIM-UPI digital transactions, across all sectors and segments of the population and further deepening of digital payments in the country.

It will also help in making accessible, digital modes of payments to unbanked and marginalised sections of population, who are not part of the formal banking and financial system, official sources said.