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Union Cabinet Approves Outlay of Rs 2,600 Crore For Promotional Incentives For Rupay, UPI transactions
According to the cabinet decision, under the said scheme, acquiring 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 FY 2022-23
Photo Credit : Reuters
The Union Cabinet on Wednesday approved an outlay of ₹2,600 crore to promote payments using RuPay cards and the Unified Payments Interface (UPI). This was announced by Union Minister Bhupendra Yadav. According to an official statement by the union cabinet, banks will be provided this incentive money to promote such digital payments.
According to the cabinet decision, under the said scheme, acquiring 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 FY 2022-23.
This fund will be paid to banks in view of the lack of a Merchant Discount Rate (MDR) - a commission on digital transactions - for UPI and RuPay transactions. The cabinet said that this regime has led to complaints from the RBI and banks, which are worried about the sustainability of building digital payments infrastructure in the absence of payments needed to scale and maintain them.
"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," the Cabinet said, referring to payment systems recently introduced by the National Payments Corporation of India.
As a result of a previous incentive scheme for digital payments in the last financial year, the Cabinet said, "Total digital payments transactions have registered a year-on-year growth of 59%, rising from 5,554 crore in FY2020-21 to 8,840 crore in FY2021-22."
It may be recalled that the finance minister Nirmala Sitharaman, in her speech on the Budget for FY2022-23, had announced the government’s intent to continue the financial support for digital payments announced in the previous Budget, with a focus on promoting use of payment platforms that are economical and user-friendly. The scheme has been formulated in compliance with the aforesaid Budget announcement.