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Cabinet approves extension of incentives for UPI transactions up to Rs 2,000 for small merchants

Economic Times

Economic Times · 5m ago

Cabinet approves extension of incentives for UPI transactions up to Rs 2,000 for small merchants

The Union Cabinet approved a Rs 1,500 crore incentive scheme for small digital transactions, aimed at reducing costs for stakeholders in the UPI ecosystem. The scheme applies to UPI transactions under Rs 2,000 for small merchants, providing a 0.15% per transaction incentive. This initiative supports local businesses by making digital payments cost-effective, with zero Merchant Discount Rate (MDR). It excludes large merchants, focusing solely on small merchants to encourage digital transaction growth.

Related News

GST Council may consider imposing 18% tax on payment aggregators for small transactions up to Rs 2,000

Inc42 · 10m ago

GST Council may consider imposing 18% tax on payment aggregators for small transactions up to Rs 2,000

The Goods and Services Tax (GST) Council may consider imposing an 18% GST on payment aggregators for small digital transactions up to Rs 2,000. The decision is expected to be made during the council's meeting on September 9. Currently, payment aggregators are exempt from GST for transactions below Rs 2,000. This move could impact small businesses heavily reliant on frequent low-value transactions. However, transactions made through Unified Payments Interface (UPI) will remain unaffected as UPI transactions do not incur GST. UPI now constitutes more than 80% of total retail digital payments in India.

Subsidy on small-value UPI payments cut, banks look for ways to offset cost - The Economic Times

Economic Times

Economic Times · 28d ago

Subsidy on small-value UPI payments cut, banks look for ways to offset cost - The Economic Times

The Indian government has reduced incentives for small-value UPI payments, impacting banks by further squeezing their revenue. Previously, incentives for processing such transactions at small merchant outlets were cut from 0.25% to 0.15%. This change, along with the withdrawal of incentives for RuPay debit cards and large merchant UPI payments, has forced banks to consider passing costs to partners or customers. The reduction reflects a budgetary cut for digital payment incentives from Rs 3,500 crore to Rs 1,500 crore.

NPCI pushing new UPI players to offer incentives to expand market share

Economic Times

Economic Times · 1y ago

NPCI pushing new UPI players to offer incentives to expand market share

The National Payments Corporation of India (NPCI) is urging new third-party payment apps on Unified Payments Interface (UPI) to invest and offer incentives to users. This move is aimed at reducing the concentration of transactions on platforms like PhonePe and Google Pay, which currently hold around 85% market share. The NPCI is in constant communication with the leaders of these new UPI players, discussing the offers they are running. However, small incentives may not be enough to significantly shift market share. The deadline for implementing a 30% cap on UPI transactions is the end of this year, and new UPI apps are seeking clarity on its extension.

UPI payments above Rs 3,000 may attract charges: Report

Economic Times

Economic Times · 2m ago

UPI payments above Rs 3,000 may attract charges: Report

The Indian government is considering reintroducing merchant charges on Unified Payments Interface (UPI) transactions over Rs 3,000 to enhance revenue streams. Currently exempt, the proposed fees would apply to larger transactions, exempting small-ticket items. This change aims to balance financial sustainability for banks and payment providers, following the removal of Merchant Discount Rates (MDR), while keeping UPI favorable for small merchants. Meetings have been held to reassess the policy framework as UPI transactions dominate the digital payment landscape.

Paytm shares hit 52-week high as fintech rolls out UPI Lite auto top-up for small payments

Economic Times

Economic Times · 9m ago

Paytm shares hit 52-week high as fintech rolls out UPI Lite auto top-up for small payments

Paytm shares surged over 4% to reach a 52-week high at Rs 939 following the announcement of an automatic top-up feature for its UPI LITE service. The new feature enables PIN-less transactions for payments under Rs 500 and is available for select users of Yes Bank and Axis Bank. Paytm's UPI LITE service allows small-value payments up to Rs 2,000. Additionally, Paytm introduced a UPI statement download feature and has expanded its UPI service globally. Despite the initial rally, the stock experienced some profit booking and was trading at Rs 889.8 as of 1:24 pm.

To ease financial squeeze, fintechs mull seeking MDR restoration or higher subsidy

Economic Times

Economic Times · 5m ago

To ease financial squeeze, fintechs mull seeking MDR restoration or higher subsidy

The fintech industry is urging the Indian government to restore merchant discount rates (MDR) or increase subsidy allocations for Unified Payments Interface (UPI) transactions, claiming the current Rs 1,500 crore allocation is insufficient for growth. The government recently removed incentives on RuPay debit cards and large merchant transactions, further straining the sector. Industry leaders suggest introducing a low MDR for merchants with higher turnovers to address funding issues while maintaining zero MDR for smaller merchants.

Government cuts funding for RuPay and BHIM-UPI incentive scheme in Budget 2025

YourStory

YourStory · 6m ago

Government cuts funding for RuPay and BHIM-UPI incentive scheme in Budget 2025

The Indian government has reduced funding for the RuPay and BHIM-UPI incentive scheme from Rs 2,484.97 crore in FY 2023-24 to Rs 437 crore by FY 2025-26, cutting it by 82%. Initially set at Rs 1,441 crore for FY 2024-25, incentives were later revised to Rs 2,000 crore. UPI incentives are crucial due to the eliminated Merchant Discount Rate (MDR), supporting small players in digital payments. With UPI's market share growing to 83%, NPCI extended the compliance deadline for third-party app volume limits to 2026.

'India-tech for the world is ready': Anupam Mittal says it's time for UPI to disrupt global payment giants like Visa, Mastercard

Business Today

Business Today · 5m ago

'India-tech for the world is ready': Anupam Mittal says it's time for UPI to disrupt global payment giants like Visa, Mastercard

Anupam Mittal, founder of Shaadi.com, encourages the global expansion of the Unified Payments Interface (UPI) to challenge payment giants like Visa and Mastercard. UPI's potential to disrupt the multi-trillion-dollar payments industry by eliminating transaction fees and facilitating seamless global payments is highlighted. Several countries, including Singapore and France, are integrating UPI. The Indian government has launched an incentive scheme to promote low-value BHIM-UPI transactions, supporting small merchants with transaction incentives.

Union Cabinet approves restructuring, extension of PM SVANidhi scheme for street vendors

Economic Times

Economic Times · 2d ago

Union Cabinet approves restructuring, extension of PM SVANidhi scheme for street vendors

The Union Cabinet of India approved the restructuring and extension of the PM SVANidhi scheme for street vendors until March 31, 2030, with an allocation of Rs 7,332 crore. The scheme now offers increased loan limits and includes provisions for UPI-linked RuPay credit cards. It aims to enhance street vendors' entrepreneurship, financial literacy, and digital skills. The effort addresses vendors' financial struggles while promoting digital payments and formal economic integration, benefiting 1.15 crore street vendors.

What’s in NPCI’s wallet? A plan to unclog banking channels

Economic Times

Economic Times · 7m ago

What’s in NPCI’s wallet? A plan to unclog banking channels

The National Payments Corporation of India (NPCI) plans to implement a lower, uniform interchange fee to boost mobile wallet use for Unified Payments Interface (UPI) transactions. This aims to alleviate pressure on banks from numerous small digital payments. The proposed fee of 0.6%-0.7%, down from 1.1% on transactions over Rs 2,000, intends to motivate wallet providers like MobiKwik and Amazon Pay to promote UPI payments, enhancing security and generating revenue.

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