Union Cabinet Approves Scheme to Encourage Digital Transactions

On 11^th January 2023, the Union Cabinet approved a scheme worth 2,600 Cr to encourage digital transactions. As per the scheme, financial incentives would be provided to acquiring or receiver banks for facilitating transactions taking place through RuPay Debit Cards and low-value BHIM-UPI (Unified Payments Interface) for a one-year duration beginning from April 2022.

Several initiatives and schemes have been launched by the government in the past to promote digital payments in the country. These measures along with the onset of the COVID-19 pandemic resulted in a surge in digital payment transactions. Consequently, in December 2022, UPI achieved a record of 782.9 million digital payment transactions totaling Rs 12.82 lakh crore.

While presenting the budget for the financial year 2022-23, Union Finance Minister, Nirmala Sitharaman divulged the intent of the Government to proceed with its continued support for digital payments as was previously stated in the 2021-22 budget with a spotlight on economic and user-friendly platforms. Hence, in conformity with the said announcement and to implement the ideals of the initiative – ‘Sabka Saath, Sabka Vikas’, this incentive scheme was approved.

Through this scheme, the government also aspires to encourage the use of digital payment modes such as UPI Lite and UPI 123Pay. By incentivizing banks to undertake the promotion of Point-of-Sale and e-commerce transactions, the scheme is expected to expedite the growth of digital payment systems in the country.