Digital payment ecosystem gets support worth ₹1,500 crore

The Union budget has earmarked ₹1,500 crore for a scheme to incentivize digital payments, which took off significantly in India following the coronavirus pandemic. UPI transactions witnessed a continuous rise, clocking close to 2.3 billion transactions in January, up from 2.23 billion in December. “There has been a manifold increase in digital payments in the recent past. To give a further boost to digital transactions, I earmark ₹1,500 crore for a proposed scheme that will provide financial incentive to promote digital modes of payment,” finance minister Nirmala Sitharaman said in her budget speech.

However, she didn’t say how the capital will be deployed.

“We welcome the ₹1,500 crore announcement. Hopefully, it will be used to reimburse losses suffered by payment service providers for processing RuPay debit cards and UPI transactions for free in 2020 as well as top up the ₹500-crore fund set up by the RBI as part Payments Infrastructure Development Fund,” said Vishwas Patel, chairman of Payments Council of India, a non-governmental body representing payment firms.

Top payment executives have said in the past that lack of monetization around digital payments in the country is stifling innovation and investments in the space. “We are hoping the funds will be used towards developing alternatives to zero merchant discount rate policy and initiatives towards bringing digital financial literacy in vernacular languages. These will instill trust in the system and accelerate adoption from MSMEs,” said Harshil Mathur, CEO and co-founder, Razorpay, a payment solution provider.