This is not the first time that the centre has set aside funds for this reason. Before this, the government had provisioned INR 1,300 Cr for incentivizing RuPay debit cards and BHIM-UPI transactions for FY22.
Nearly a week after the Union Cabinet approved INR 2,600 Cr worth of incentives for the promotion of digital payments, the government on Monday (January 16) finally notified the scheme. In its notification, the Centre ratified the scheme, which aims to promote RuPay debit cards and low-value BHIM-UPI transactions under INR 2,000 for the financial year 2022-23 (FY23).
The incentives will be made available to acquiring banks to promote point-of-sale (PoS) and e-commerce transactions as per rates defined in the order. For RuPay debit card payments, the acquiring banks will get a flat rate of 0.4% as incentive per transaction for non-industry programmes. This amount will be capped at INR 100. For industry programmes, the acquiring banks will get 0.15% per transaction amount, capped at INR 6.
Industry programmes for RuPay debit card transactions cover industries such as insurance, education, agriculture, fuel, jewellery, and hospitals, among others. On similar lines, the Union government has fixed incentive rates for each BHIM-UPI transaction at 0.25% for non-industry programmes, while the same rate has been set around 0.15% for industry programmes. For UPI-BHIM transactions, industry programmes include transactions related to fuel, petroleum products, telecommunications, utility payments, and business and personal services, among others.
The Ministry of Electronics and Information Technology (MeitY), in consultation with the National Payments Corporation of India (NPCI), has been tasked with issuing operational guidelines for the implementation of the incentive scheme. The order comes days after the Central Board of Indirect Taxes and Customs (CBIC), in a separate clarification, said that these incentives were subsidies and, hence, non-taxable.
This is not the first time that the centre has set aside funds for this reason. Before this, the government had provisioned INR 1,300 Cr for incentivizing RuPay debit cards and BHIM-UPI transactions for FY22.
Recently, the chairman of Payments Council of India (PCI), Vishwas Patel, told the media that the body has sought about INR 8,000 Cr in MDR support for the next fiscal for both RuPay and BHIM-UPI transactions.
Meanwhile, UPI continues to see strong traction. The payments interface processed 7,404.45 Cr transactions, totaling INR 125.95 Lakh Cr last year, led largely by PhonePe and Google Pay.
