New Delhi [India], March 19 (ANI): The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved the 'Incentive Scheme for promotion of low-value BHIM-UPI transactions Person to Merchant (P2M)' for the financial year 2024-25.

The scheme to promote low-value BHIM-UPI transactions will be implemented at an estimated cost of Rs 1,500 crore.

Only the UPI transactions upto Rs 2,000 for small merchants are covered under the scheme.

Incentives at the rate of 0.15 per cent per transaction value will be provided for transactions upto Rs 2,000 pertaining to the category of small merchants.

For all quarters of the scheme, 80 per cent of the admitted claim amount by the acquiring banks will be disbursed without any conditions.

The reimbursement of the remaining 20 per cent of the admitted claim amount for each quarter will be contingent upon the fulfilment of the following conditions:

10 per cent of the admitted claim will be provided only when the technical decline of the acquiring bank will be less than 0.75 per cent; and the remaining 10 per cent of the admitted claim will be provided only when the system uptime of the acquiring bank will be greater than 99.5 per cent.

This scheme will enable small merchants to avail of UPI services at no additional cost.

'As small merchants are price-sensitive, incentives would encourage them to accept UPI payment,' the government said.

It will also supplement the government's vision of a less-cash economy by formalizing and accounting for the transaction in digital form.

The incentive is paid by the Government to the Acquiring bank (Merchant's bank) and thereafter shared among other stakeholders: Issuer Bank (Customer's Bank), Payment Service Provider Bank (facilitates onboarding of customers on UPI app / API integrations) and App Providers (TPAPs). (ANI)