The Union Cabinet has approved a Rs 1,500 crore incentive scheme for FY 2024–25 to promote low-value BHIM-UPI (P2M) transactions and encourage digital payments among small merchants. Scheme overview The incentive scheme for promotion of low-value BHIM-UPI transactions (P2M) will be implemented from 1st April 2024 to 31st March 2025. It exclusively covers UPI (Person to Merchant – P2M) transactions of up to Rs 2,000, specifically targeting small merchants to encourage the adoption of digital payments at the grassroots level. Scheme objectives Promote BHIM-UPI Platform: Aim to reach Rs 20,000 crore in transaction volume during FY 2024-25. Strengthen Payment Infrastructure: Support participants in building secure digital payment systems. Ensure Reliability: Maintain high uptime and reduce technical declines. Rural Penetration: Expand UPI services in tier 3 to 6 cities and remote areas using: UPI 123PAY (for feature phones) UPI Lite and UPI LiteX (for offline payments) Benefits For small merchants, UPI transactions up to Rs 2,000 will attract zero Merchant Discount Rate (MDR) and will be eligible for an incentive of 0.15% of the transaction value. For transactions above Rs 2,000, there will be zero MDR but no incentive. In the case of large merchants, all transactions - regardless of the amount, will have zero MDR and will not carry any incentive. Source : PIB