The Indian government plans to invest 320 million dollars to encourage more people to use digital payment methods.
On its national Unified Payments Interface (UPI) digital payments network, the Indian government has authorized plans to encourage the use of RuPay debit cards and mobile payments.
With 2,600 crore ($318.4 million) designated for the plan, banks will be financially incentivized to encourage point-of-sale (POS) and e-commerce transactions using RuPay debit cards and the BHIM payments app till the end of the fiscal year 2022-23. The National Payments Corporation of India (NPCI) created BHIM, an Indian mobile payment application that runs on the UPI.
According to the Indian government, the incentive program would foster the growth of “a viable digital payment ecosystem.”
The move comes after the Reserve Bank of India (RBI) and other digital payment players voiced concerns about UPI’s zero merchant discount rate, which gives lesser fees than typical for banks and card firms to profit from and might hinder the expansion of the digital payments ecosystem.
UPI was created by the NPCI and went online with 21 banks in 2016. This ecosystem has expanded to 358 banks since September of last year.
Many Indians prefer to make and receive payments via their mobile devices, with UPI accounting for the majority of transactions. As of October of the previous year, UPI processed around 6.5 billion transactions each month.