Center announces INR 2,600 crore incentive programme for RuPay and UPI-BHIM transactions
- ByStartupStory | January 17, 2023
The Centre has already set aside money for this purpose in the past. Prior to this, the government had allocated INR 1,300 Cr for FY22 to encourage use of BHIM-UPI and Ru-Pay debit cards.
The government on Monday (January 16) finally notified the programme, about a week after the Union Cabinet approved incentives totaling INR 2,600 Cr to promote digital payments. The initiative, which intends to promote RuPay debit cards and low-value BHIM-UPI transactions under INR 2,000 for the financial year 2022-23, was ratified by the Center in its announcement (FY23).
The incentives will be made available to acquiring banks in accordance with the rates specified in the order to encourage point of sale (PoS) and ecommerce transactions. The acquiring banks will get a flat rate of 0.4% as an incentive for non-industry programmes for RuPay debit card payments. The maximum amount will be INR 100. The acquiring banks will receive 0.15% of each transaction, up to a maximum of INR 6, for industry programmes.
Industry-specific RuPay debit card transaction programmes include, among others, those for the insurance, education, agricultural, retail, jewellery, and healthcare sectors. Accordingly, the Union government set the incentive rates for each BHIM-UPI transaction at 0.25 percent for non-industry programmes and 0.1 percent for industrial programmes.
Industry programmes for UPI-BHIM transactions include, among other things, those for fuel, petroleum goods, telecommunications, utility payments, and business and personal services.
The duty of drafting operational guidelines for the implementation of the incentive programme has been given to the Ministry of Electronics and Information Technology (MeitY), in cooperation with the National Payments Corporation of India (NPCI). The order was issued a few days after the Central Board of Indirect Taxes and Customs (CBIC) clarified that these incentives were subsidies and hence exempt from taxation.
The center has already set aside money for this purpose in the past. Prior to this, the government had allocated INR 1,300 Cr for FY22 to encourage use of BHIM-UPI and RuPay debit cards.
Vishwas Patel, the chairman of Payments Council of India (PCI), recently disclosed to the public that the organization has requested approximately INR 8,000 Cr in MDR support for both RuPay and BHIM-UPI transactions for the upcoming fiscal.
UPI, meantime, keeps gaining significant traction. Last year, the payments interface completed 7,404,45 Cr transactions worth INR 125,95 Lakh Cr, with PhonePe and Google Pay accounting for the majority of that amount.
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