INCENTIVES FOR DIGITAL PAYMENTS - ECONOMY
News: Centre
earmarks ₹2,600 crore as incentive for banks to promote digital payments
What's in the news?
● The
Union Cabinet approved an outlay of ₹2,600
crore to promote payments using RuPay cards and the Unified Payments Interface
(UPI).
● Banks
will be provided this incentive money to promote such digital payments.
Key takeaways:
● The
fund will be paid to banks in view of the lack
of a Merchant Discount Rate (MDR) - a commission on digital transactions
for UPI and RuPay transactions.
● The
incentives will increase the sustainability of building digital payments
infrastructure in the country.
Features of the scheme:
● Under
the scheme, acquiring banks will be provided financial incentive for promoting
Point-of-sale (PoS) and e-commerce transactions using RuPay Debit Cards and
low-value BHIM-UPI transactions.
● Time Period - April
2023 - March 2024.
● Fund - ₹2,600
crores.
● The
scheme will also promote UPI Lite and
UPI 123PAY as economical and user-friendly digital payments solutions and
enable further deepening of digital payments in the country.
○ UPI
Lite and UPI 123PAY are the payment systems recently introduced by the National
Payments Corporation of India to reduce the load on banking networks for small
transactions, and to allow payments over older feature phones, respectively.