Ministry of Finance has introduced an incentive scheme to promote low-value BHIM-UPI transactions (Person to Merchant) for the financial year 2024-25. The initiative aims to further boost digital payments, particularly benefiting small merchants and ensuring continued access to UPI services for consumers. The scheme has an estimated outlay of ₹1,500 crore and will run from April 1, 2024, to March 31, 2025. It covers UPI transactions up to ₹2,000 for small merchants, defined as those with an annual turnover of up to ₹20 lakh. An incentive of 15% per transaction will be provided for eligible transactions. Banks, payment system operators, and app providers promoting these transactions will benefit from the scheme. Disbursement of claims will be quarterly, with 80% paid unconditionally, while the remaining 20% will depend on technical performance criteria such as system uptime and transaction declines. The Department of Financial Services (DFS), in consultation with the National Payments Corporation of India (NPCI), will oversee the scheme’s implementation and may revise guidelines based on fund utilization. The initiative reinforces the government’s ongoing efforts to expand digital payments in untapped areas while supporting small businesses.
MINISTRY OF FINANCE
(Department of Financial Services )
NOTIFICATION
New Delhi, the 21st March, 2025
Subject: Incentive scheme for promotion of low-value BHIM-UPI transactions (Person to Merchant) for financial year 2024-25
F. No. 5/11/2024-DP-DFS.—1. The Government has been taking up various initiatives to promote digital payments in the country. Over the past few years, digital payment transactions have witnessed tremendous growth across the country with the number of transactions growing from 2,071 Crore in financial year 2017-18 to 18,737 Crore in financial year 2023-24.
2. Although there has been an unprecedented growth in digital payments over the past few years, there is potential for further growth. It is, therefore, important to promote the adoption of digital payments, targeting untapped areas or segments or sectors.
3. To give further boost to digital payments in the country, it has been decided by the Government to implement “Incentive scheme for promotion of low-value BHIM-UPI transactions (Person to Merchant) for financial year 2024-25”. The scheme will incentivize the banks, other payment system operators and app service providers promoting low-value BHIM-UPI transactions. It will specifically benefit the small merchants as they continue to avail Unified Payment Interface (UPI) services. The common citizens will be benefitted with seamless and round-the-clock UPI services without any additional cost.
4. The broad contours of the scheme are as follows-
4.1 The incentive scheme for promotion of low-value BHIM-UPI transactions (P2M) will be implemented at an estimated outlay of ₹ 1,500 Crore.
4.2 The period of implementation of the scheme will be one year from the 1st April, 2024 to 31st March,
4.3 Only the UPI (P2M) transactions upto ₹ 2,000 /- for Small Merchants are covered under the
4.4 Incentive at the rate of 15 percent per transaction will be provided for transactions upto ₹ 2,000 pertaining to category of small merchants.
(Note: Small Merchants- with turnover upto ₹ 20 lakh during the previous financial year, as defined by RBI in its notification number RBI/2017-18/105 DPSS.CO.PD No. 1633/02.14.003/2017-18 dated 07th December, 2017)
4.5 DFS, in consultation with the Financial Advisor (DFS) and NPCI, may review from time to time the utilisation of funds under the scheme and, accordingly, make changes in the scheme, if required.
4.6 Disbursement of claims submitted by banks will be made on a quarterly basis, to the following extent:
(a) For all the quarters of the scheme, 80 percent of the admitted claim amount by the acquiring banks will be disbursed without any conditions.
(b) The disbursement of the remaining 20 percent of the admitted claim amount for each quarter will be contingent upon fulfilment of the conditions in sub-clause (i) and (ii).
(i) 10 percent of the admitted claim will be provided only when the technical decline of the acquiring bank is less than 0.75 percent.
(ii) The remaining 10 percent of the admitted claim will be provided only when the system uptime of the acquiring bank will be greater than 99.5 percent.
4.7 DFS, in consultation with NPCI, will issue operational guidelines for implementation of the scheme, including the incentive sharing mechanism among the ecosystem partners.
4.8 The Scheme shall be applicable to the banks having operations in India and transactions done in
ABHIJIT PHUKON, Jt. Secy.
