Mumbai: The National Payments Corporation of India (NPCI) has issued a circular outlining the UPI Vyapar Saksham Scheme to expand digital payments among small merchants. The November 11 circular sets out incentives for deploying physical QR codes and soundboxes and increasing UPI transactions.
Merchant Eligibility
The scheme covers merchants with annual turnover of up to Rs 40 lakh in the previous financial year. It prioritises tier-3 to tier-6 cities, the northeastern states, Jammu and Kashmir, and Ladakh. Merchants in tier-1 and tier-2 cities must be covered by notified central schemes such as PM SVANidhi or PM Vishwakarma.
Deployment Incentives
Payment providers can earn Rs 300 for installing a physical QR code and Rs 750 for deploying a soundbox at a new merchant outlet. The merchant must record at least 25 eligible UPI transactions totalling at least Rs 5,000 per month in at least two months of a quarter.
Transaction Incentives
The scheme offers a 0.03 percent incentive on eligible transaction value for participating payment providers, with a 50 percent uplift in designated areas. Banks must record at least 5 percent quarterly growth in eligible transaction volumes. In targeted areas, an additional 0.20 percent applies to the quarter-on-quarter increase in eligible transaction value.
Funding and Timeline
Issuing and acquiring banks, payment service providers and UPI app operators will contribute 5 percent of their respective merchant discount rate (MDR) shares. The fund allocates 30 percent to merchant onboarding, 50 percent to transaction growth and 20 percent to incremental growth in targeted areas. Transfers between allocations are barred.
The scheme will run for three years from the date UPI MDR takes effect. The circular leaves the start date and rates unspecified. Only eligible payments of Rs 2,000 or less qualify. Artificially split payments are excluded.
NPCI targets annual deployment of 60 lakh to one crore QR codes and five lakh to 10 lakh soundboxes, alongside 30 percent to 50 percent transaction growth among existing small merchants. Incentives will be calculated quarterly and processed within 30 days of claim submission.
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