NPCI to Introduce UPI Vyapaar Saksham Scheme to Offer Incentives to Small Merchants, Aims to Promote Acceptance

The National Payments Corporation of India (NPCI), responsible for managing India's Unified Payments Interface (UPI), will introduce a new initiative to onboard more small merchants, according to a leaked memo sent to UPI members. Dubbed the UPI Vyapaar Saksham Scheme, the initiative is expected to come into effect soon. The memo states that the scheme aims to promote UPI acceptance among small merchants in smaller Indian cities and remote regions. NPCI could introduce three incentive components for onboarding new merchants, increasing the number of transactions, and increasing the value of eligible transactions. This comes as NPCI reportedly plans to introduce transaction charges for merchant payments.

UPI Vyapaar Saksham Scheme Motive, Eligibility and Incentive Structure (Expected)

In a post on X, Zee News journalist Ambarish Pandey (@pandeyambarish) has shared a memo that was sent to “all” UPI members by Sohini Rajola, NPCI's Executive Director, Growth. The leaked memo reveals that NPCI plans to introduce the UPI Vyapaar Saksham Scheme to expand the acceptance of the digital payments interface, facilitate the onboarding of new merchants, and to grow the number of UPI transactions. The scheme will focus on Tier 3 to Tier 6 centres, North-Eastern states, and the Union Territories of Jammu and Kashmir and Ladakh.

The UPI Vyapaar Saksham Scheme might have a sunset period of three years from the date of implementation of the Merchant Discount Rate (MDR) charges, which was earlier expected to come into effect after Diwali. Coming to the incentive structure, NPCI is said to offer an incentive of 0.03 percent of the aggregate value of eligible transactions to small merchants. Meanwhile, shopkeepers and other merchants located in “Targeted Geographies” will receive a 50 percent additional incentive on the base rate.

Further, the memo highlights that transactions undertaken by existing and new small merchants, including peer-to-peer merchant transactions, will be eligible for the incremental growth incentives, applicable to merchants in the targeted regions. However, the incremental transaction value compared to the previous quarter should be positive, the leaked memo notes.

According to Pandey, small merchants with an annual turnover of up to Rs. 40 lakhs will be eligible to receive incentives under the UPI Vyapaar Saksham Scheme. NPCI is said to award a Rs. 300 incentive for installing a QR code at a new merchant's shop and another Rs. 750 incentive for the installation of the sound box. Moreover, 5 percent of the MDR collection could be allocated for the upcoming scheme, of which 30 percent will be earmarked for onboarding new merchants, 50 percent for increasing the number of transactions, and 20 percent for growth in the value of transactions.

NPCI expects two major outcomes from the new UPI Vyapaar Saksham Scheme. First, it expects to see the deployment of 60 lakh to 1 crore new physical QR codes annually, along with the deployment of 5 lakh to 10 lakh new soundbox devices each year.