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The Union Cabinet announced an incentive scheme for Unified Payments Interface (UPI) payments.

News in Detail

The Union Cabinet has approved an incentive scheme worth ₹1,500 crore for promoting Unified Payments Interface (UPI) transactions below ₹2,000 during the financial year 2024-25.

The scheme aims to encourage banks and small merchants to expand UPI adoption by providing them with financial support.

The government aims to promote the growth of digital payments while minimizing the financial burden on both merchants and consumers.

How will banks benefit? - Banks will receive an incentive of 0.15% on eligible UPI transactions. One-fifth of the incentive depends on the bank’s performance in maintaining and improving its digital payment infrastructure.

Eligibility: Only transactions below ₹2,000 will be eligible for the incentive.

How does it benefit small merchants?: They hesitate to accept card payments due to the transaction fees imposed by Visa, Mastercard, and RuPay. Since UPI transactions do not have such fees, this incentive makes it even more attractive for small businesses to accept digital payments.

About Unified Payments Interface (UPI)

It is an instant real-time payment system developed by the National Payments Corporation of India (NPCI).

It allows users to link multiple bank accounts in a single mobile application and transfer money seamlessly.

How does UPI work?

UPI works by linking a user's bank account to a Virtual Payment Address (VPA), eliminating the need to enter bank details for every transaction.

Users can send or receive money, pay bills, or make online purchases using their mobile number, UPI ID, or QR code. Transactions are processed instantly through the Immediate Payment Service (IMPS) network.

The National Payments Corporation of India (NPCI) developed and manages UPI. It ensures the system runs smoothly, securely, and in compliance with Reserve Bank of India (RBI) regulations.

Features of UPI

• Instant Fund Transfer: Money is transferred in real time, 24/7, including weekends and holidays.
• Multiple Bank Accounts in One App: Users can link multiple bank accounts and switch between them easily.
• Two-Factor Authentication: UPI follows RBI guidelines for security, using MPIN (Mobile PIN) and device authentication.
• QR Code Payments: Users can scan and pay at stores without sharing account details.
• UPI Autopay: Users can set up recurring payments for subscriptions, bills, and loans.

How Secure is UPI?

• Two-Factor Authentication (UPI PIN and device verification)
• Fraud Detection Mechanisms (monitoring for suspicious transactions)
• End-to-End Encryption

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Source:

THE HINDU

https://t.me/+hJqMV1O0se03Njk9