FinMin launches ₹1,500 cr Incentive Scheme to Boost Low-Value BHIM-UPI Transactions for FY 2024-25
The Ministry of Finance launched a Rs. 1,500 crore incentive scheme to promote low-value BHIM-UPI transactions (P2M) for FY 2024–25
The Ministry of Finance (Department of Financial Services) issued Notification No. 5/11/2024-DP-DFS dated 21st March 2025, announcing the launch of an Incentive Scheme for the Promotion of Low-Value BHIM-UPI Transactions (Person to Merchant) for the financial year 2024–25.
The scheme which comes into effect from 1st April 2024 and will run till 31st March 2025, aims to boost small-value UPI transactions up to Rs. 2,000 made to small merchants by incentivizing banks, payment system operators, and app service providers. With an approved outlay of Rs. 1,500 crore, the initiative is expected to hugely push digital transactions at the grassroots level.
Despite massive growth in digital payments from 2,071 crore transactions in FY 2017–18 to 18,737 crore in FY 2023–24 there is still substantial untapped potential, especially in under-served sectors and geographies.
Read More: Boost for Small Merchants: Incentive Scheme Removes MDR on Low-Value P2M BHIM-UPI Transactions
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Key Features of the Scheme:
Scope: Applicable only to UPI (Person to Merchant) transactions of Rs. 2,000 or less for small merchants (turnover up to Rs. 20 lakh as per RBI definition).
Incentive Rate: A 0.15% incentive will be given per eligible transaction.
Beneficiaries: Banks, UPI app providers, and other payment ecosystem players promoting such transactions.
Disbursement Structure:
- 80% of the claim amount to acquiring banks will be disbursed unconditionally.
- The remaining 20% will be disbursed based on performance, i.e.: 10% if the technical decline rate is under 0.75% and 10% if system uptime exceeds 99.5%.
Applicability: Only for banks and transactions within India.
Review Mechanism: DFS, in consultation with NPCI and the Financial Advisor, may review and revise the scheme as required.
Implementation Guidelines: DFS will issue operational directions in coordination with NPCI, including rules for incentive sharing among ecosystem partners.
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