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Union Cabinet approves ₹2,600 crore outlay for digital payments

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 Funds will be paid to banks considering the reduction in the merchant discount rate - a commission on digital transactions - for UPI and RuPay transactions.

Union Minister Bhupendra Yadav on Wednesday announced that the Union Cabinet has approved an outlay of Rs 2,600 crore to promote payments using RuPay cards and Unified Payments Interface (UPI). This incentive amount will be provided to banks to promote such digital payments, the cabinet said in a press release.

Funds will be paid to banks considering the reduction in the merchant discount rate (MDR) – a commission on digital transactions – for UPI and RuPay transactions. This regime has drawn complaints from the Reserve Bank of India (RBI) and banks, the cabinet said, who are concerned about the sustainability of building digital payments infrastructure, in the absence of the payments infrastructure required to scale and maintain them.

Referring to the recently launched payment systems by the National Payments Corporation of India, the cabinet said, "The scheme will also promote UPI Lite and UPI 123PAY as cost-effective and user-friendly digital payment solutions and promote digital payments in the country." will enable it to go deeper. To reduce the load on the banking network for small transactions, and allow payments on older feature phones respectively.
As a result of the previous stimulus plan for digital payments in the last financial year, the cabinet said, "a 59% year-on-year growth has been recorded in total digital payment transactions, which stood at [₹]5,554 crore in FY 2020-21". growing from . to [₹]8,840 crore in FY 2021-22.”

Union Finance Minister Nirmala Sitharaman had earlier committed to continue financial support for digital payment systems and the cabinet said this new scheme is in line with that commitment.

Reports: The Hindu

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