Government to Reward Banks Boosting Payments With RuPay


The government announced a program to reward banks for boosting point-of-sale and online purchases made with RuPay debit cards as well as small-volume payments made to retailers through the BHIM-UPI network.

The notification, dated January 14, 2023, was posted on the website of the Ministry of Electronics and IT this week. It is a part of a plan announced in the Union Budget for 2022–2023 to increase the nation's use of digital transactions.

For the financial year 2022–2023, beginning on April 1, 2022, the government has launched a program to reward acquiring banks by paying a percentage of the value of RuPay debit card transactions and low-value BHIM–UPI transactions up to Rs 2,000 (Person–to–Merchant–P2M).

The acquiring bank would receive a 0.4 percent incentive for low volume transactions using RuPay debit cards at point-of-sale (PoS) and through e-commerce, with a ceiling of Rs 100. This incentive is apart from any industry-related programs.

The allocation of Rs 2,600 crore will be fungible between RuPay debit cards and BHIM-UPI,” according to the notification

“This incentive scheme will promote digital payments by incentivising banks to build a robust digital payments ecosystem and to promote RuPay debit cards and BHIM-UPI as low-cost digital payments mode across all sectors and segments of population. In line with the Budget announcement, the scheme will also promote UPI Lite and UPI 123PAY as economical and user-friendly digital payments solutions,” according to the notification.

In the case of industry programs, the reward will be 0.15 percent of low volume transactions made using RuPay debit cards, with a maximum of Rs.6.

Similar to this, the acquirer bank will receive 0.25 percent of the transaction amount for other than industry programs for payments made to merchants using BHIM-UPI for transactions up to Rs 2,000, and 0.15 percent for industry programs covering, among other things, insurance, mutual funds, government, education, railways, agriculture, and fuel.

The program is said to be in place starting on April 1, 2022, for one year.

“The financial outlay for the scheme shall be restricted to Rs 2,600 crore. To secure this, MeitY will, if required, review the merchant categories included in industry programs. The allocation of Rs 2,600 crore will be fungible between RuPay debit cards and BHIM-UPI,” according to the notification.

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