Financial support for digital payments

(MainsGS3:Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.)

Context:

• Recently, the Union Cabinet chaired by Prime Minister Narendra Modi approved an incentive scheme for promotion of RuPay debit Cards and low-value BHIM-UPI transactions (person-to-merchant) in FY 2022-23 with an outlay of Rs 2,600 crore.

Promoting financial incentives:

• Under the scheme, acquiring banks will be given financial incentives for promoting point-of-sale and e-commerce transactions using RuPay debit Cards and low-value BHIM-UPI transactions (person-to-merchant) for the ongoing financial year. 
• Acquiring banks are those which install and manage apoint-of-sale terminal (or the hardware system required to process payments) at retail outlets. The issuing bank is responsible for issuing the card to the customer.  
• This scheme has been formulated in compliance with Finance Minister Nirmala Sitharaman’s FY 2022-23 budgetary endeavour to continue financial support for digital payments, focusing on promoting the use of payment platforms that are economical and user-friendly.

Promoting payment ecosystem:

• The National Payments Corporation of India (NPCI) paved the way for international (phone) numbers to be able to transact using UPI.Non-resident accounts such as non-resident external accounts (NRE) and non-resident ordinary accounts (NRO), having international numbers, will now be allowed into the UPI payment system. 
• NPCI had allowed UPI transactions to and from NRO/NRE accounts linked to Indian numbers back in October 2018.  
• NRE accounts are those used by non-residents to transfer earnings from foreign soil to India while NRO accounts are used to manage income earned in India by non-residents.  
• This measure could prove significant for the UPI-based payment ecosystem which has largely witnessed a sequential rise in the previous calendar year.  
• Currently, users from ten countries will be able to avail the facility— Singapore, Australia, Canada, Hong Kong, Oman, Qatar, the United States of America, Saudi Arabia, United Arab Emirates, United Kingdom and Hong Kong.

Upward trajectory:

• As of January 17, 3,192.70 million transactions approximately worth Rs 5.52 lakh crore have been facilitated using UPI in the ongoing month, as per NPCI data.
• In the previous calendar year, excluding one month of fall (between January and February), the volume of UPI transactions has been on an upward trajectory throughout. 
• As per the DigiDhan dashboard maintained by the Ministry of Electronics and Information Technology (MeitY), BHIM-UPI accounted for 52% of all digital payments in FY 2021-22. At present, it stands at 61.38%