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INDIAN CABINET APPROVES ₹1,500 CRORE INCENTIVE SCHEME TO BOOST BHIM-UPI TRANSACTIONS

  • Writer: Kings Federation International
    Kings Federation International
  • Mar 20
  • 1 min read

An Emirati Magazine publication – Released on March 20, 2025 | www.emiratimagazine.com


The Union Cabinet has approved a ₹1,500 crore incentive scheme to promote low-value BHIM-UPI transactions, particularly for payments to merchants. Running from April 1, 2024, to March 31, 2025, the scheme aims to enhance digital adoption among small businesses.

Under this initiative, person-to-merchant (P2M) transactions up to ₹2,000 will be incentivized. Small merchants will benefit from zero merchant discount rate (MDR), while banks will receive a 0.15% incentive per transaction. Large merchants will also enjoy zero MDR but will not qualify for incentives. Transactions above ₹2,000 remain MDR-free but without incentives.


Prime Minister Narendra Modi highlighted the scheme’s role in promoting digital payments and improving the "Ease of Living." Incentives will be distributed through acquiring banks to issuer banks, payment service providers, and app operators, based on performance metrics.

However, industry leaders criticize the scheme as underfunded, arguing that ₹1,500 crore is insufficient for sustaining UPI’s rapid growth, with expectations of at least ₹5,000 crore.

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