The Centre has allocated INR 2,000 Cr under the incentive scheme for promotion of RuPay debit cards and low-value BHIM-UPI transactions of up to INR 2,000 for 2026-27. According to the Union Budget 2026-27 documents, this number is near 5X higher than INR 437 Cr budgeted for FY26. However, it is lower than the INR 2,196 Cr revised estimate for FY26. Under the scheme, which was introduced in Union Budget 2021-22, the government reimburses banks for the cost of processing RuPay debit card and low-value BHIM-UPI transactions so that customers and small merchants can use these digital payments at zero or very-low cost. These incentives are typically provided at the rate of 0.15% per transaction value for transactions up to INR 2,000 pertaining to the category of small merchants In March 2025, the Union Cabinet approved an estimated outlay of INR 1,500 Cr for this scheme. While the sustained incentives have played a critical role in the growth of UPI, the industry has been calling to move beyond incentives. Reintroduction of merchant discount rates (MDR) has been a long-standing demand of the industry. MDR, which is a fee charged to merchants by banks or payment service providers for processing digital… Read MoreInc42 Media
