Govt announces scheme for digital transactions using UPI, RuPay debit cards

Financial outlay for one year is Rs1,300 cr

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday has approved an incentive scheme to promote RuPayDebit cards and low-value (up to Rs 2,000) BHIM-UPI transactions in the country.                

Under the scheme, the acquiring banks will be incentivised by the Government, by way of paying percentage of value of transactions (P2M) done through RuPay Debit cards and low-value BHIM-UPI modes of payments, at an estimated financial outlay of Rs 1,300 crore for a period of one year w.e.f. April 1, 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 marginalized populations, who are outside of the formal banking and financial system, said government.

The scheme has been formulated in compliance with the FY22 Budget announcement by the government to give further boost to digital transactions in the country.

"The scheme will further spur research and development and innovation in fintech space, and will help the Government in further deepening of digital payments in various part of countries," said government in a statement. 

Electronics and IT Minister Ashwini Vaishnaw said 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," Vaishnaw said.

He also said that 4.2 billion digital transactions valued at Rs 7.56 trillion took place in November.